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Write 6 pages with APA style on Trade Liberalization and Comparative Advantage.
Write 6 pages with APA style on Trade Liberalization and Comparative Advantage. The theory of dependence emerged with the writings of Baran. In his work, Baran made a division of the world into capitalist and underdeveloped economies. He tried to emphasize the interrelation between development and underdevelopment processes in a world-centered approach. He was the first one to mention the technology and international division of labor as the major determinants of the famous center (developed) and periphery (underdeveloped) approach. This theory argues that in this relationship the center produces for itself and the periphery and the periphery produces mainly for the center. In the periphery, there is the existence of a large subsistence sector. According to the dependency explained by Baran, the stagnation in the periphery is the result of the emergence of global capitalism. The process of development is supposed to be related to capital accumulation, which is actually dependent upon surplus extraction. According to Baran, in the process of global trade the underdeveloped. .The competitive advantage approach draws its strength from the fact that firms have a place of importance rather than nations. However, this theory does not make the nation insignificant either. The success of the nation depends on the success of the firms producing a particular product. The increasing level of outsourcing in recent times especially the US firms outsourcing to India, prove the validity of his theory. The development of the modern day’s MNCs has led to another form of trade known as firm trade where exchanges take place within firms.