Paul Krugman’s Masterclass: Theories of Trade (Wonkish)

• Global economy has ups and downs. Strong with the invention of railroads, steamships, telegraph, weak after WWI (heavy tariffs, thread of U-boats, etc.)
• In the 1990s, there was an explosion of global trade.
• Global trade offers competitive advantages.
  • Lets countries focus on what they’re good at.
  • If a country is good at everything, let other countries take products it might be better at and focus on doing less. Example: US can produce clothing and computers. Bangladesh is good a producing clothes, so let them do that and focus on computers.
  • Main takeaway is to produce less variety to gain efficiency in doing more of what you’re good at.
• The New Trade Theory
  • Paul Krugman’s theory.
  • Not entirely sure what this is, but explained in video by example of auto trade between US and Canada. Instead of US and Canada producing all vehicles the same, each would specialize and become more efficient in certain models.