"The problem with the free trade area is that it is free."
This quote by Bertil Ohlin suggests that in a free trade area, there are no tariffs or barriers to trade between member countries, which can be beneficial for increasing economic efficiency and reducing costs for consumers. However, Ohlin implies that the lack of constraints might also lead to an imbalance, as countries may take advantage of this freedom to exploit each other's resources and markets without proper regulation or protection mechanisms in place. In essence, he argues that while free trade can have benefits, it should not be entirely unrestricted and must consider the potential negative consequences on both trading partners.
"Governments should not interfere unduly in economic life and should leave to individuals as much freedom of action as is consistent with a just and equitable society."
This quote by Bertil Ohlin advocates for minimal government intervention in the economy, while emphasizing the importance of social justice and fairness. It suggests that individual freedom and economic liberty should be maximized, but within the bounds of a society that is considered just and equitable. In other words, economic policies should strike a balance between fostering economic growth and ensuring a fair distribution of resources and opportunities among all members of society.
"The only way to make certain that there will be full employment is by ensuring that the national product increases at the rate of the increase in labor."
This quote by Bertil Ohlin suggests that for a country to achieve full employment, the growth of its national output or GDP must match the growth of its labor force. In other words, economic growth – creating more goods and services – is crucial for providing jobs as the population grows or enters the workforce. If a nation's productivity does not increase at a rate that matches the expansion of its labor pool, it will struggle to find employment for everyone willing and able to work, leading to unemployment.
"In international trade, countries tend to specialize in producing those goods for which they have a comparative advantage."
Bertil Ohlin's quote suggests that countries should focus on producing goods where they have a comparative advantage – either absolute or relative. This means that a country should concentrate on the production of goods it can produce more efficiently, offering better quality or lower cost than other countries, in order to maximize its benefits in international trade. This principle is essential for global economic efficiency and fostering prosperity among nations.
"The theory of comparative advantage suggests that a country should specialize in producing and exporting those commodities in which it has a comparative advantage over other countries."
The quote by Bertil Ohlin emphasizes an economic principle known as the Theory of Comparative Advantage. This theory suggests that each country should focus on producing goods where it has a relative, or 'comparative,' efficiency compared to other nations, rather than just absolute efficiency. In simpler terms, if Country A can produce both apples and oranges more efficiently than Country B in apples but only slightly more efficient in oranges, it should focus on apple production because it has a comparative advantage in apples over Country B. This principle, when applied globally, allows for international trade that benefits all participating countries through increased efficiency, specialization, and mutual gains from trade.
In 1922, I got a small stipend from the Swedish-American Foundation and went to Cambridge, England, for a few months and thereafter to Harvard University. In the summer, Cambridge was rather empty, but I am grateful for many pleasant talks about economics with Austin Robinson who, in the summer of 1922, seemed to be about as lonely as I was.
- Bertil Ohlin
As mathematics had been my best subject at school, my parents proposed - and I accepted - studies at the University of Lund in mathematics, statistics, and economics. The choice of the latter subject is said to be due to the fact that at the age of five years, I was very fond of calculating the cost of the various cakes my mother used to bake.
- Bertil Ohlin
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