Introduction

This game is designed to introduce you to the concepts of absolute and comparative advantage in international trade. It should be noted at the outset that this is not a competitive game - the purpose is to enhance your understanding of these often tricky concepts so it is important that you stick to the rules.

You will be a part of a country producing a product - a star or a triangle. There will be three rounds to this game - one without any specialisation, one where you will specialise and one where you are able to engage in some trading with other countries. You will then have some time to discuss the issues arising from the game.

The Game

You will be divided into two groups each representing a different country. Both countries are able to produce two commodities - stars and triangles. Each country has a certain amount of resources to enable them to produce the commodities - scissors, paper, a ruler and a pencil.

One country, however, will have a template to help them produce the commodities. If you have this template you will be able to trace around it to produce the commodities. In reality, most countries could probably produce a wide range of goods but may be better at producing some than others because of a number of advantages they might have, for example, deposits of certain raw materials, climate and so on. The UK could, in theory, produce oranges and bananas but it would need to build glasshouses and install all manner of technical devices to ensure that the correct amount of light, heat and water was given to the plants to produce the fruit. Other countries would not need to do this because they might have a natural climate that allows them to produce these products relatively easily.

You will have to think of a name for your country and you will be given a record sheet to complete at the end of each round. As the game progresses you will be able to see a number of things happening, the list below gives you some idea about the types of issues you might cover and consider:

Round One

You will be given ten minutes to produce as many triangles and stars as possible in this period. You must produce the goods accurately and one at a time - any not conforming to the regulations will not be counted. You will have five minutes to produce stars and five to produce triangles - your teacher/lecturer will tell you when to swap over production.

When the ten minutes is up you should record your production levels on the record sheet provided (available in HTML or in Word). What is the total world output of stars and triangles?

Round Two

In this round your country will specialise in producing just one commodity. If you are the country with the templates, then you will produce stars whilst the other country will concentrate on just producing triangles.

At then end of the ten minutes, you will be asked to record your production figures on the record sheet. What is the world production level after specialisation?

Round Three

You will now have the opportunity to arrange some trade between the two countries in order to get the things you were not producing in Round Two. When you trade you will have to negotiate how many stars you are willing to exchange for each triangle and vice versa. The rate at which you agree the trade is referred to as your Terms of Trade. Record your gains on the record sheet.

Discussion

During the lesson you will discuss some of the outcomes of the game in relation to the issues highlighted in the list above in 'The Game'.

The world trading system is obviously much more complex than the game you have played but essentially the issues are the same. Some countries have more and better resources than others but there will be gains from specialisation and trade.

Where problems arise is in the extent to which each country is able to negotiate its terms of trade and the nature of the power it is able to exert. For example, the United States as one of the world's most powerful trading nations and economies is likely to be able to negotiate favourable trading terms with a country such as Ethiopia.

As you go through your discussions, ensure that you make notes in your second record sheet (available in HTML or in Word). This will help to provide you with a useful set of notes on the topics covered.