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This is pretty well understood, viz the Law of Comparative Advantage [1]. This doesn't tell us that you have to be the cheapest in the world, only that you shou

This is pretty well understood, viz the Law of Comparative Advantage [1]. This doesn't tell us that you have to be the cheapest in the world, only that you should specialize in whatever you can do most efficiently. If your trade partners do the same, everyone wins. If they don't do the same, then they are causing themselves to lose out. [1] https://en.wikipedia.org/wiki/Comparative_advantage https://en.wikipedia.org/wiki/Comparative_advantage

danbruc 9y ago
But if you are unable to or stop being able to produce anything appealing to the world market, then you are loosing and opening your market is a really a bad idea.
- CWuestefeld 9y ago
  No, that's not the case. Imagine a simple world with two countries (1 and 2) and two commodities (A and B). It might be that country 1 has something that allows them to produce both A and B with greater efficiency than can 2. But even when that's the case, they (and the whole world) do better when they continue to concentrate on producing the one for which they have the greatest advantage (say, A). Even if 1 can also produce B more efficiently than can 2, it works out better if they ignore that, leaving it to 2, and just concentrate on producing all the A they can. That solution doesn't change if there are more countries and more commodities. It might make the big picture more complicated, but it remains a better solution for both 2 and for the entire world if 2 concentrates on producing whatever it's best at. (Note that this is purely based on economics of commodities, and not national security. When some of those commodities are things like "missiles", it may well be that a country things they need to have a guaranteed secure supply, should one of their trading partners decide not to be friends anymore.)
  - danbruc 9y ago
    I don't think that is true, at least not generally. In the extrem case, if 1 can produce A and B at zero costs, why would it be better if 2 produced anything assuming that the costs are non-zero for A and B? And I see no obvious reason why that would change if we go from zero to small non-zero costs. It might be true if there is an unlimited demand for at least one of the goods and we simply fully utilize the production capacities of 1 and 2 but that is not a realistic scenario in general. And even then I don't think it would be true in general. What if 2 could not satisfy the demand for B?

danbruc 9y ago

But if you are unable to or stop being able to produce anything appealing to the world market, then you are loosing and opening your market is a really a bad idea.

CWuestefeld 9y ago
No, that's not the case. Imagine a simple world with two countries (1 and 2) and two commodities (A and B). It might be that country 1 has something that allows them to produce both A and B with greater efficiency than can 2. But even when that's the case, they (and the whole world) do better when they continue to concentrate on producing the one for which they have the greatest advantage (say, A). Even if 1 can also produce B more efficiently than can 2, it works out better if they ignore that, leaving it to 2, and just concentrate on producing all the A they can. That solution doesn't change if there are more countries and more commodities. It might make the big picture more complicated, but it remains a better solution for both 2 and for the entire world if 2 concentrates on producing whatever it's best at. (Note that this is purely based on economics of commodities, and not national security. When some of those commodities are things like "missiles", it may well be that a country things they need to have a guaranteed secure supply, should one of their trading partners decide not to be friends anymore.)
- danbruc 9y ago
  I don't think that is true, at least not generally. In the extrem case, if 1 can produce A and B at zero costs, why would it be better if 2 produced anything assuming that the costs are non-zero for A and B? And I see no obvious reason why that would change if we go from zero to small non-zero costs. It might be true if there is an unlimited demand for at least one of the goods and we simply fully utilize the production capacities of 1 and 2 but that is not a realistic scenario in general. And even then I don't think it would be true in general. What if 2 could not satisfy the demand for B?