Under some circumstances, trade could stifle the development of new industries and reduce global efficiency. All of the following describe conditions that could lead to that situation EXCEPT
A) an initial head start gives a scale advantage to already existing firms in one country.
B) diseconomies of scale make it impossible for new firms to enter the market.
C) a location has a better-developed linkage between suppliers and producers, giving it a cost advantage.
D) a historical accident, such as the shifting of airplane production to the United States to avoid World War II bombings, causes firms in one location to have a competitive advantage.
Question 2
Explain the events that triggered the Debt Crisis and the Lost Decade.
What will be an ideal response?
Question 3
Technology transfer
A) is not encouraged by low-income countries.
B) is not beneficial to high-income countries.
C) is a consequence of direct investment.
D) is a consequence of all foreign investment.
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