What is the Copenhagen climate change summit?

The UN meeting is the deadline for thrashing out a successor to the Kyoto
protocol, with the aim of preventing dangerous global warming.
What's the bottom line?
Climate scientists are convinced the world must stop the growth in greenhouse
gas emissions and start making them fall very soon.
The Copenhagen Climate Change Conference raised climate change policy to the highest political level.The
Copenhagen Accord contained several key elements on which there was strong convergence of the views of
governments. This included the long-term goal of limiting the maximum global average temperature increase to no
more than 2 degrees Celsius above pre-industrial levels, subject to a review in 2015. There was, however, no
agreement on how to do this in practical terms. It also included a reference to consider limiting the temperature
increase to below 1.5 degrees - a key demand made by vulnerable developing countries.

1. Developed Nations Vs. Developing Nations

Pretty much all the countries attending the talks agree that greenhouse gas
emissions are contributing to climate change. But few want to slash their
emissions without first ensuring that competing countries will do the same.
Developing countries want the United States and other developed nations to
cut emissions the most, since historically it's the industrialized world that's
responsible for most of the carbon pollution in the atmosphere. But China,
India, Brazil, and many others are growing rapidly, so the United States and
other developed countries argue that the developing world must get a
handle on its emissions, too.
2. Targets for Cutting Emissions
In Copenhagen, this tension will most likely play out in a numbers game. The
scientific community says industrialized countries need to cut their emissions
25 percent to 40 percent by 2020 to avoid the worst of climate change. The
European Union seems OK with that idea, but the United States has been
resistant. President Obama recently announced that he'd call for cutting U.S.
greenhouse emissions by about 17 percent. It has gotten a mixed response,
with many nations saying the United States needs to be much more
aggressive. Meanwhile, a few weeks ago, China announced that it will curb
the "intensity" of its emissions (relative to GDP) by 40 percent to 45 percent
by 2020. That was hailed as a sign that China is getting serious about
climate change, but it has also left some questions. Watch for countries in

Copenhagen to press China to be more specific about what its emissions

goals mean.
[See photos from the Copenhagen climate conference.]
3. Assistance to Poor Countries
Many of the countries that will be hardest hit by climate change are poor.
Some are island nations. Some are prone to drought. Others have big
coastlines and are already seeing the impact of changing ocean chemistry
and rising sea levels. To respond to climate change, they say, they'll need
Western help. A lot of it. And that means money. But it's unclear right now
just how much rich countries will be willing to give poor countries (especially
when government treasuries aren't doing so well) in terms of cash and new
technology. The World Bank estimates that poor countries will need up to
$100 billion a year to respond to climate change. So far, Obama and Western
countries have pledged $10 billion by 2012. Clearly, a lot of work remains to
be done.
4. Carbon Trading
There's a general agreementinternationally, anywaythat the best way to
tackle emissions is by putting a price on carbon. That means a future
involving a busy, lucrative global carbon market, in which people buy and
sell permits to emit carbon. These global markets, not surprisingly, are
complicated, and there are a lot of tough issues to be worked out when it
comes to making sure that markets are honest and transparent. No one
wants a repeat of the current financial crisis. But many countries also don't
want an international regulatory body telling them how to run their economy.
5. Pollution Offsets
One way for countries to cut emissions is to switch to cleaner forms of
energy or to make their power plants more energy efficient. But there are
other options. For example, a power company, rather than trimming its own
emissions on site, might find it cheaper to pay a forest owner to plant a
bunch of carbon-trapping trees. In other words, the power company is
"offsetting" its pollution by paying someone else. As part of the Copenhagen
talks, officials will be considering which types of offset programs work and
can actually be enforced. (There's a big potential for fraud here.) Countries

like Brazil and Indonesia, for example, are pushing hard for a forest program
that would handsomely reward them for not cutting down their trees.
. Drawing on the theory of comparative advantage to support your arguments, outline the case for free
trade.
Historical Overview
The theory of comparative advantage is perhaps the most important concept in international trade theory. It
is also one of the most commonly misunderstood principles.

Answer: If each country specializes in the production of goods in which it has a

comparative advantage relative to its trading partners, and then trades these goods
for those produced by trading partners that have a comparative advantage in other
goods, all countries can end up increasing their utility and consuming higher
quantities (or at least the same) of all goods than if they only consumed what they
produced.
The theory of comparative advantage is an economic theory about the work gains from trade for
individuals, firms, or nations that arise from differences in their factor endowments or technological
progress.[1] In an economic model, an agent has a comparative advantage over another in producing
a particular good if they can produce that good at a lower relative opportunity cost or autarky price,
i.e. at a lower relative marginal cost prior to trade.[2] One does not compare the monetary costs of
production or even the resource costs (labor needed per unit of output) of production. Instead, one
must compare the opportunity costs of producing goods across countries. [3] The closely
relatedlaw or principle of comparative advantage holds that under free trade, an agent will
produce more of and consume less of a good for which they have a comparative advantage. [4]
David Ricardo developed the classical theory of comparative advantage in 1817 to explain why
countries engage in international trade even when one country's workers are more efficient at
producing every single good than workers in other countries. He demonstrated that if two countries
capable of producing two commodities engage in the free market, then each country will increase its
overall consumption by exporting the good for which it has a comparative advantage while importing
the other good, provided that there exist differences in labor productivity between both countries.[5]
[6]

Widely regarded as one of the most powerful[7] yet counter-intuitive[8] insights in economics,

Ricardo's theory implies that comparative advantage rather than absolute advantage is responsible
for much of international trade.
First, the principle of comparative advantage is clearly counter-intuitive. Many results from the formal model
are contrary to simple logic. Secondly, the theory is easy to confuse with another notion about advantageous
trade, known in trade theory as the theory of absolute advantage. The logic behind absolute

advantage is quite intuitive. This confusion between these two concepts leads many people to think that
they understand comparative advantage when in fact, what they understand is absolute advantage. Finally,
the theory of comparative advantage is all too often presented only in its mathematical form. Using
numerical examples or diagrammatic representations are extremely useful in demonstrating the basic results
and the deeper implications of the theory. However, it is also easy to see the results mathematically, without
ever understanding the basic intuition of the theory.
The early logic that free trade could be advantageous for countries was based on the concept of absolute
advantages in production. Adam Smith wrote in The Wealth of Nations,
"If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it
of them with some part of the produce of our own industry, employed in a way in which we have some
advantage. " (Book IV, Section ii, 12)
The idea here is simple and intuitive. If our country can produce some set of goods at lower cost than a
foreign country, and if the foreign country can produce some other set of goods at a lower cost than we can
produce them, then clearly it would be best for us to trade our relatively cheaper goods for their relatively
cheaper goods. In this way both countries may gain from trade

The Ricardian Model - Assumptions and Results

The modern version of the Ricardian model and its results are typically presented by constructing and
analyzing an economic model of an international economy. In its most simple form, the model assumes two
countries producing two goods using labor as the only factor of production. Goods are assumed
homogeneous (i.e., identical) across firms and countries. Labor is homogeneous within a country but
heterogeneous (non-identical) across countries. Goods can be transported costlessly between countries.
Labor can be reallocated costlessly between industries within a country but cannot move between countries.
Labor is always fully employed. Production technology differences exist across industries and across
countries and are reflected in labor productivity parameters. The labor and goods markets are assumed to
be perfectly competitive in both countries. Firms are assumed to maximize profit while consumers (workers)
are assumed to maximize utility.