Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Sem I 2014-5
Comparative Advantage
Factor Endowments
y Factor-endowment theory
y Heckscher-Ohlin theory
y Immediate basis for trade: difference between
Sem I 2014-5
Factor Endowments
y Factor-endowment theory
y Resource-endowment ratio
advantage
y Technology
y Resource endowments
y Demand
y Assumption: technology and demand are
approximately the same between countries
Sem I 2014-5
Factor Endowments
y Factor-endowment theory
Sem I 2014-5
its relatively
y abundant resource
y Import the product which in production uses the
Sem I 2014-5
Sem I 2014-5
TABLE 3.1
Factor Endowments
advantage
5
AT-Int Econ 103A; Textbook: R. Carbaugh, Int Econ, 14th ed
Sem I 2014-5
TABLE 3.2
Factor Endowments
Sem I 2014-5
Sem I 2014-5
TABLE 3.3
Factor Endowments
Sem I 2014-5
10
AT-Int Econ 103A; Textbook: R. Carbaugh, Int Econ, 14th ed
Factor Endowments
y Factor-Price Equalization
y Redirect demand away from the scarce resource
y Toward the abundant resource in each nation
y Trade leads to factor-price equalization
y The cheap resource becomes relatively more
expensive
y The expensive resource becomes relatively less
expensive
By forcing product prices into equality, international trade also tends to force
factor prices into equality across countries.
11
Sem I 2014-5
12
AT-Int Econ 103A; Textbook: R. Carbaugh, Int Econ, 14th ed
Sem I 2014-5
Factor Endowments
y Factor-Price Equalization
y Real world no full factor-price equalization
y Uneven ownership of human capital
y
13
Sem I 2014-5
14
AT-Int Econ 103A; Textbook: R. Carbaugh, Int Econ, 14th ed
Factor Endowments
15
costs
y Hundreds of thousands of retirees
y 2008,
2008 GM spentt $4
$4.8
8 billi
billion on h
health
lth care
y $1,500 higher cost per vehicle
y Higher hourly wages: $30 (and $30 in benefits)
y Toyota, Honda
y Health care costs - $200 per vehicle
y Hourly wages: $24 (and $24 in benefits)
Sem I 2014-5
16
Sem I 2014-5
Sem I 2014-5
TABLE 3.5 Labor-cost gap per vehicle hurts competitiveness of big three
automakers
Factor Endowments
y International trade - substitute for migration?
y Immigrants
y Help the economy grow
y Increasing the size of the labor force
y Complementary: take low skilled jobs few
technological innovation
y Competition: displace locals
y Growth: immigrant entrepreneurs generate
18
Factor Endowments
y Specific-factors theory
Sem I 2014-5
Factor Endowments
y International trade
19
Sem I 2014-5
industries
y Resources specific to import-competing
industries
y Lose as a result of trade
y Resources specific to export industries
y Gain as a result of trade
20
Sem I 2014-5
Sem I 2014-5
y Wage ratio
21
FIGURE 3.3
Sem I 2014-5
unskilled workers
y Labor ratio
y Quantity of skilled workers available divided by
22
Sem I 2014-5
24
Sem I 2014-5
Sem I 2014-5
y Critiques of globalization
25
up
y China and India economic development;
p
;
26
FIGURE 3.4
Sem I 2014-5
interdependence
y Ignores the ways in which modern trade differs
27
Sem I 2014-5
The figure suggests that countries that are abundant in skilled labor capture
larger shares of U.S. imports in industries that intensively use those factors.
Conversely, countries that are abundant in unskilled labor capture larger shares
of
28 U.S. imports in industries that intensively use those factors.
AT-Int Econ 103A; Textbook: R. Carbaugh, Int Econ, 14th ed
Sem I 2014-5
economies of scale
y Produce that good in great quantity at low
average unit costs
y Trade those low-cost goods to other nations
29
Sem I 2014-5
By adding to the size of the domestic market, international trade permits longer
production runs by domestic firms, which can lead to greater efficiency and
reductions
in unit costs.
30
AT-Int Econ 103A; Textbook: R. Carbaugh, Int Econ, 14th ed
increases
y Concentration of an industrys
y firms in a
particular geographic
y Larger pools of a specialized type of worker
y New knowledge about production technology
spreads among firms in the area
31
Sem I 2014-5
32
Sem I 2014-5
Sem I 2014-5
income levels
y A countrys average or per capita income will
yield a particular pattern of demand
y Nations with high per capita incomes will
demand high-quality manufactured goods
(luxuries)
y Nations with low per capita incomes will
demand lower-quality goods (necessities)
33
Sem I 2014-5
goods
g
y Wealthy (industrial) nations
y More likely to trade with other wealthy nations
y Poor (developing) nations
y More likely to trade with other poor nations
34
Intra-industry Trade
Sem I 2014-5
Intra-industry Trade
35
Sem I 2014-5
requirements
y Conducted mostly among industrial countries
y Similar resource endowments
y Firms oligopolies
y Trade in homogeneous goods
y Transportation costs
y Seasonal
36
Sem I 2014-5
Sem I 2014-5
TABLE 3.7
Intra-industry Trade
nations
y Economies of scale
y Fewer adjustment problems
37
Sem I 2014-5
38
AT-Int Econ 103A; Textbook: R. Carbaugh, Int Econ, 14th ed
y Technological innovations
y Result in:
1.
commodities
2.
3.
y Commodity improvements
4.
y Often transitory
5.
39
Sem I 2014-5
40
Sem I 2014-5
10
Sem I 2014-5
Stage I
Stage V
Stage IV
Stage III
Imports
manufacturers
Innovating
Country
Exports
Imitating
Exports
Country
Imports
41
Sem I 2014-5
42
Time
Sem I 2014-5
y Industrial policy
y Can be created
capital
p
y Industrial policy
y Government is actively involved in creating
comparative advantage
y Strategy to revitalize, improve, and develop an
industry
43
Sem I 2014-5
44
Sem I 2014-5
11
Sem I 2014-5
industry
y Worlds manufacturers of commercial jetliners
y Oligopolistic
g p
market
y Dominated by
y Boeing of the United States
y Airbus Company of Europe
European governments
y Allegedly:
y Loans for the development
p
of new aircraft
y Below-market interest rates
y 70-90% of an aircrafts development cost
y Repay the loans after it delivers an aircraft
y Can avoid repaying the loans in full if sales of
45
Sem I 2014-5
46
y Airbus
y Indirect subsidies
Sem I 2014-5
y Airbus
47
Sem I 2014-5
48
Sem I 2014-5
12
Sem I 2014-5
Transportation Costs
y Transportation costs
y Workplace safety
y Freight charges
Administration
y Product safety
y
y Consumer Product Safety Commission
y Clean environment
y Environmental Protection Agency
y May improve the wellbeing of the public
y Can result in higher costs for domestic firms
49
Sem I 2014-5
liberalization
50
Transportation Costs
Sem I 2014-5
Transportation Costs
y Transportation costs
production
y Reduce the g
gains from trade
y The high
high-cost
cost importing country
differential
51
Sem I 2014-5
52
Sem I 2014-5
13
Sem I 2014-5
Transportation Costs
y Falling transportation costs since 1965
y Imports - more competitive in U.S. markets
y Higher volume of trade for U.S.
y Due to technological improvements
y Large dry-bulk
dry bulk containers
y Large scale tankers
y Containerization
y Wide-bodied jets
y Telecommunications
53
Sem I 2014-5
54
AT-Int Econ 103A; Textbook: R. Carbaugh, Int Econ, 14th ed
Transportation Costs
y Speed
y Transport costs
traditionally
y been minor p
players
y
55
Sem I 2014-5
56
Sem I 2014-5
14
Sem I 2014-5
Transportation Costs
y Terrorist attack
y Added costs
57
Sem I 2014-5
58
Sem I 2014-5
15