国际经济学英文PPT

Factor endowments as a source of comparative advantage
• In the 1920s and 1930s , Swedish economists Eli Heckscher and Bertil Ohlin formulated a theory addressing two questions left largely unexplained by Ricardo: • (1) What determines comparative advantage? • (2) What effect does international trade have on the earnings of various factors of production in trading nations ? • Because Heckscher and Ohlin maintained that factor (resource) endowments determine a nation’s comparative advantage, their theory became known as the factor- endowment theory.
International Economics
By Robert J. Carbaugh 12th Edition
Chapter 3:
Sources of Comparative Advantage
ቤተ መጻሕፍቲ ባይዱ
Copyright ©2005, Thomson/South-Western
Huge gains brought by the comparative advantage to the trading nations through specialization and trade. However, we have not yet to discuss the factors that ultimately determine why a country has a comparative advantage or comparative disadvantage in a product. What are the sources of comparative advantage?
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Graphical Example
Graphical Example
o Finally, let’s assume that with trade both nations prefer a posttrade consumption combination of aircraft and textiles given by point C. o Because point C is beyond the autarky consumption point A, each country realizes gains from trade
o list of top exports confirm theory’s suggestions
International trade tends to equalize product prices among trading partners. Can the same be said for resource prices?
Factor Price Equalization
Factor Price Equalization
o In each nation, the cheap resource becomes relatively more expensive, and the expensive resource becomes relatively cheaper, until price equalization occurs.
Applying the Theory to U.S.-China Trade
o U.S. - relatively abundant capital China - relatively abundant labor o expectation – U.S. produces capital intensive goods and China produces labor intensive
Graphical Example
• Similarly, because China is the relatively labor- abundant country and textiles are the relatively labor- intensive good, China has greater capability of producing textiles than does the United States. • Thus , China’ s production possibilities curve is skewed toward textiles.
o Example: P72
• Although a country as a whole benefits from comparative advantage, why certain groups favor free trade, whereas other groups oppose it? • How trade affects the distribution of income among various factors of production?
The Factor-Endowment Theory
o U.S.: capital/labor ratio = 0.5 (100/200) o China: capital/labor ratio = 0.02 (20/1,000)
o Since the U.S. has relatively more abundant capital, the U.S. will produce capital-intensive goods with China producing goods that are more labor-intensive.
The Factor-Endowment Theory
Because production possibilities curves depend on technology and resource endowments, the ultimate determinants of comparative advantage are technology, resource endowments, and tastes and preferences. The factor-endowment theory assumes that technology and tastes and preferences are approximately the same between countries, and thus it emphasizes the role of relative differences in resource endowments as the ultimate determinant of comparative advantage.
The Factor-Endowment Theory
• nation will export goods which it produces with resources that are relatively abundant • nation will import goods which it produces with resources that are relatively scarce
Graphical Example
U.S. MRT = 0.33 China’s MRT = 4.0 implication is that U.S. has a lower relative price in aircraft so U.S. has comparative advantage in aircraft & China has comparative advantage in textiles
The Factor-Endowment Theory
• The factor-endowment theory asserts that the immediate basis for trade is the difference between pretrade relative product prices of trading nations. • These prices depend on the production possibilities curves and tastes and preferences (demand conditions) in the trading countries.
The Factor-Endowment Theory
The effect of resource endowments on comparative advantage is summarized as follows:
Graphical Example
• Because the United States is the relatively capital-abundant country and aircraft are the relatively capital-intensive good, the United States has a greater capability of producing aircraft than China. • Thus , the production possibilities curve of the United States is skewed (biased) toward aircraft.
Graphical Example
• With trade, each country continues to specialize in the production of the product of its comparative advantage until its product price equalizes with that of the other country. Specialization continues until the United States reaches point B and China reaches point B’, the points at which each country’s production possibilities curve is tangent to the common relative price line that is assumed to have an absolute slope of 1.0. This relative price line becomes the equilibrium terms of trade.
Factor Price Equalization
o specialization causes U.S. to use more capital and China to use more labor
o increases price of capital in U.S. and the price of labor in China until factor costs are equal