国际经济学习题

Feb.15,2011~Jun.10,2011

International Economics

Part ⅠInternational trade

relations

Lecture 2 Why nations trade

Lecture 3The commodity composition of trade

Lecture 4 Protection of domestic industries: the tariff

Lecture 5 NTBs to trade

Lecture 6 International Mobility of Productive Factors

Feb.15,2011~Jun.10,2011

International

Economics

Lecture 3 The commodity

composition of trade

During the last century the attention of trade theorists turned from the gain from trade to the commodity composition of

trade.

Factors that determine which country exports what commodity.

Syllabus

The Factor Proportions Theory

Alternative Theories

An Emerging Consensus? Economic Adjustment to Changing

Circumstances

Summary

1.The Factor Proportions Theory •[Factor Price Equalization]

Empirical Testing

•Assumptions :

①two countries: U.S. & Germany

②two goods: wheat & textiles

③two factor of production: labor & capital

④market is completely competitive

⑤factors are not free to move between two countries

⑥each commodity has identical production function, or isoquants

⑦wheat is capital intensive and textiles are labor intensive

⑧U.S. possesses a higher capital to labor ratio than Germany

Contents and conclusions

•If we assumed that the demand conditions are similar in the two nations

•Conclusions:

The United Stated specialized in the production of wheat,and exports wheat and imports textiles;

Germany specialized in the production of textiles, and exports textiles and imports wheat.

•Each country exports the commodities that are relatively intensive in the factor which it is relatively well endowed.

•Income distribution:Owners of a country’s abundant factors gain from trade, but owners of a country’s scarce factors lose.

Significances of this model:

•It is a logically tight structure, where the conclusions follow uniquely and neatly from the assumptions;

It is highly useful in explaining a wide range of

observed phenomena;

The model implies the patterns of service trade;

It provides a possible explanation to an empirical phenomenon: the rise in income inequality in U.S. over

the past 25 years;

The model may also be attractive because it

concentrates solely upon the most elementary

properties of the trading countries;

The process can be reversed to inquire into the effect of international trade on the economic structure.