MNG4804
Assignment 2 2026
Unique number:
Due date: 30 August 2026
QUESTION 1
BOTSWANA’S ABSOLUTE ADVANTAGE IN PRECIOUS METALS AND THE
CHALLENGES OF TRADE WITH CANADA
1. Introduction
Adam Smith’s theory of absolute advantage challenged mercantilism by showing
that international trade does not necessarily create one winner and one loser.
Mercantilists treated national wealth as limited and encouraged exports while
restricting imports, because they believed one country could gain only at another
country’s expense (Hill, 2021, pp. 169–170). Smith instead argued that countries
could increase their combined production by specialising in goods they produced
more efficiently and exchanging those goods internationally. This approach supports
a positive sum relationship because cooperation can increase the benefits available
, QUESTION 1
BOTSWANA’S ABSOLUTE ADVANTAGE IN PRECIOUS METALS AND THE
CHALLENGES OF TRADE WITH CANADA
1. Introduction
Adam Smith’s theory of absolute advantage challenged mercantilism by showing that
international trade does not necessarily create one winner and one loser.
Mercantilists treated national wealth as limited and encouraged exports while
restricting imports, because they believed one country could gain only at another
country’s expense (Hill, 2021, pp. 169–170). Smith instead argued that countries
could increase their combined production by specialising in goods they produced
more efficiently and exchanging those goods internationally. This approach supports
a positive sum relationship because cooperation can increase the benefits available
to both trading countries, although positive outcomes still depend on the actual
economic conditions governing their relationship (Gavrilets and Seabright, 2025, p.
1). Botswana’s precious metals industry provides a useful example of absolute
advantage within its trade relationship with Canada, although this arrangement also
exposes serious weaknesses concerning dependence, unequal value addition and
limited industrial development.
2. Theoretical Foundation of Absolute Advantage
2.1 Mercantilism and the Zero Sum View of Trade
Mercantilism encouraged governments to promote exports, discourage imports and
maintain trade surpluses through tariffs, quotas and other restrictions. This approach
viewed accumulated financial wealth as an important measure of national power,
meaning that imports were often treated as losses rather than useful goods obtained
through exchange (Hill, 2021, p. 169). A zero sum understanding assumes that one
participant’s gain must produce an equal loss for another participant, while positive
sum cooperation allows both parties to improve their position through coordinated
action (Gavrilets and Seabright, 2025, p. 1). Mercantilist policies may protect
employment and developing industries temporarily, but permanent protection can
reduce competition, weaken efficiency and increase prices for businesses and
Assignment 2 2026
Unique number:
Due date: 30 August 2026
QUESTION 1
BOTSWANA’S ABSOLUTE ADVANTAGE IN PRECIOUS METALS AND THE
CHALLENGES OF TRADE WITH CANADA
1. Introduction
Adam Smith’s theory of absolute advantage challenged mercantilism by showing
that international trade does not necessarily create one winner and one loser.
Mercantilists treated national wealth as limited and encouraged exports while
restricting imports, because they believed one country could gain only at another
country’s expense (Hill, 2021, pp. 169–170). Smith instead argued that countries
could increase their combined production by specialising in goods they produced
more efficiently and exchanging those goods internationally. This approach supports
a positive sum relationship because cooperation can increase the benefits available
, QUESTION 1
BOTSWANA’S ABSOLUTE ADVANTAGE IN PRECIOUS METALS AND THE
CHALLENGES OF TRADE WITH CANADA
1. Introduction
Adam Smith’s theory of absolute advantage challenged mercantilism by showing that
international trade does not necessarily create one winner and one loser.
Mercantilists treated national wealth as limited and encouraged exports while
restricting imports, because they believed one country could gain only at another
country’s expense (Hill, 2021, pp. 169–170). Smith instead argued that countries
could increase their combined production by specialising in goods they produced
more efficiently and exchanging those goods internationally. This approach supports
a positive sum relationship because cooperation can increase the benefits available
to both trading countries, although positive outcomes still depend on the actual
economic conditions governing their relationship (Gavrilets and Seabright, 2025, p.
1). Botswana’s precious metals industry provides a useful example of absolute
advantage within its trade relationship with Canada, although this arrangement also
exposes serious weaknesses concerning dependence, unequal value addition and
limited industrial development.
2. Theoretical Foundation of Absolute Advantage
2.1 Mercantilism and the Zero Sum View of Trade
Mercantilism encouraged governments to promote exports, discourage imports and
maintain trade surpluses through tariffs, quotas and other restrictions. This approach
viewed accumulated financial wealth as an important measure of national power,
meaning that imports were often treated as losses rather than useful goods obtained
through exchange (Hill, 2021, p. 169). A zero sum understanding assumes that one
participant’s gain must produce an equal loss for another participant, while positive
sum cooperation allows both parties to improve their position through coordinated
action (Gavrilets and Seabright, 2025, p. 1). Mercantilist policies may protect
employment and developing industries temporarily, but permanent protection can
reduce competition, weaken efficiency and increase prices for businesses and
