Comparative Advantage Challenged

One of the best websites for following the unfolding globalization process is the Globalist. This week the Globalist had a provocative piece: From Globalization to Localization? by Stephen Roach, the Chief Economist of Morgan Stanley, a reading global financial services firm. Roach argues that workers in rich countries are being squeezed by globalization, even as workers in China and India have seen rapidly rising living standards through expanded trade. Roach discusses a growing reaction in many rich countries in the developed world against the win-win model of comparative advantage, discussed in Chapter 2 of your text. Roach suspects that “a partial backtracking is now at hand” towards increased protectionism and localization. For the complete text of Roach’s article, click here.

Summer Session Extra Credit: What is the difference between comparative and absolute advantage? Why is this distinction important? If you are the first Summer Session student to send me an e-mail at kwoodward@saddleback.edu with the answer, you will be rewarded with two extra credit Discussion Board points. Only one blog extra credit question per student can be answered in any given week for Discussion Board extra credit