Evidence on Comparative Advantage from Japan
Is there real-world evidence of the gains from trade? Many studies show that trade and economic growth are positively correlated, but it's less clear whether trade
Is there real-world evidence of the gains from trade? Many studies show that trade and economic growth are positively correlated, but it's less clear whether trade causes growth or growth causes countries to trade. To shed some light, we need a natural experiment, and find one by examining the history of Japan. Japan enforced seclusion policies from about 1639-1859, when they finally opened up to trade. From that point on, trade was mostly free. Japan benefited from exporting goods like tea and silk, and imported goods like cotton textiles and iron. Japan gained not only from trading for these goods, but over time, for these technologies. Of course, the longer-term dynamic gain from trade is that Japan has developed and become a modern economy.
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I haven't read the article, but it sounds like the gains from trade are calculated by adding the cash gained from exports to the money saved by importing cheaper goods. That seems backwards to me. What good was western cash to Japan, except to the extent that it allowed them to buy more imports?
I think you are imagining paper money..? No one back then was trading and stuffing Us dollars in their kimonos.
At the time, it would be gold, or silver, one of which was relatively cheap in Japan, ( silver I think, which made a profit for traders coming in.. So, in Japan, Gold.) Anyway, such money is pretty much universally useful and always has been... Theres a reason all those sunken treasure ships have gold and silver..
Short answer, its not paper, even now,even if thats how it seems, its a paper money conversion of Gold and other commodities, now. Then its was these commodities and gold ect.
Anyway, the benefits, according to economics are also in the money NOT spent in buying goods that are cheaper, as this allows more power for the money available, not just cash/ gold gained. Whether these savings on price are used in or out of Japan is in this point, irrelevent.