In intra-industry trade, climate or geography do not determine the level of worker productivity. Even the

general level of education or skill does not determine it. Instead, how firms engage in specific learning about

specialized products, including taking advantage of economies of scale determine the level of worker

productivity. In this vision, comparative advantage can be dynamic—that is, it can evolve and change over time

as one develops new skills and as manufacturers split the value chain in new ways. This line of thinking also

suggests that countries are not destined to have the same comparative advantage forever, but must instead be

flexible in response to ongoing changes in comparative advantage.

19.4 The Benefits of Reducing Barriers to International Trade

LEARNING OBJECTIVES

By the end of this section, you will be able to:

• Explain tariffs as barriers to trade

•

Identify at least two benefits of reducing barriers to international trade
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