Authors libby rittenberg 107
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degree of sovereignty to the Union. Members of the European Union can
trade as freely with each other as can states within the United States. Just
as the U.S. Constitution prohibits states from restricting trade with other
states, the European Union has dismantled all forms of restrictions that
countries within the Union used to impose on one another. Just as
restrictions on specialization among Ms. Ryder’s plants in Alpine Sports
would have forced it to operate inside its production possibilities curve,
restrictions that had existed among members of the European Union once
put the members of the Union inside their collective production
possibilities curve.
The experiment appears to have been a success. Trade among member
nations has expanded sharply. A study by Carmen Diaz Mora, an economist
at the University of Castilla-La Mancha in Spain, found that the bulk of the
expanded trade within the Union was trade within industries and that it
was driven by comparative advantage. In particular, she found that
countries in the northern part of the Union, such as France and Germany,
tended to specialize in relatively high-valued goods—office equipment and
electrical goods—while countries in the southern part of the Union
specialized in relatively low-valued goods such as food and textile
products. In trade within the clothing industry, countries such as Italy tend
to specialize in the production of higher-valued clothing, while lowerincome countries such as Portugal specialize in the production of cheaper
clothing. In sparkling wines, France specializes in the higher-quality end of
the spectrum, while Spain specializes in the low-quality end. Similarly,
Germany specializes in the production of higher-quality cars while Spain
specializes in lower-quality vehicles. Similar exchanges occur across a
wide range of goods and services.
Attributed to Libby Rittenberg and Timothy Tregarthen
Saylor URL: />
Saylor.org
107
