Question

3. Considering the low level of productivity of Sub-Saharan African countries, they are best served if they avoid trading with the more productive European Union. Discuss the validity of this statement within the framework of the Ricardian Model.

Answer 1

Ricardian Model:- The Ricardian Model of Trade is develped by English political economist David Ricardo. It is the first model of international trade. This model explain why countries are busy ininternational trade even when one country’s workers are efficient at producing goods.

The statement “the low level of productivity of Sub-Saharam African countries, they are best served if they avoid trading with the more productive European Union, is valid in the reference of the Ricardian Model. It is so,

1. Sub-Saharan African countries have full labour forces.

2. These countries have natural resources.

3. If they avoid trading with European union, their domestic productive power increases.

4. Local people get employment.

5. GDP of the country increase.

6. These countries become independent.

7. Local products get promoted among the people.

8. They have chance to increase their exports.