ch04-Resources-and-Trade-The-Heckscher-Ohlin-Model.ppt

《ch04-Resources-and-Trade-The-Heckscher-Ohlin-Model.ppt》由会员分享，可在线阅读，更多相关《ch04-Resources-and-Trade-The-Heckscher-Ohlin-Model.ppt（43页珍藏版）》请在淘文阁 - 分享文档赚钱的网站上搜索。

1、Chapter 4Resources and Trade:The Heckscher-Ohlin ModelPrepared by Iordanis PetsasTo Accompany International Economics:Theory and Policy International Economics:Theory and Policy,Sixth Editionby Paul R.Krugman and Maurice Obstfeld1 Introduction A Model of a Two-Factor Economy Effects of International

2、 Trade Between Two-Factor Economies Empirical Evidence on the Heckscher-Ohlin Model Summary Appendix:Factor Prices,Goods Prices,and Input Choices Chapter Organization2Introduction In the real world,while trade is partly explained by differences in labor productivity,it also reflects differences in c

3、ountries resources.The Heckscher-Ohlin theory:Emphasizes resource differences as the only source of trade Shows that comparative advantage is influenced by:Relative factor abundance(refers to countries)Relative factor intensity(refers to goods)Is also referred to as the factor-proportions theory3 As

4、sumptions of the Model An economy can produce two goods,cloth and food.The production of these goods requires two inputs that are in limited supply;labor(L)and land(T).Production of food is land-intensive and production of cloth is labor-intensive in both countries.Perfect competition prevails in al

5、l markets.A Model of a Two-Factor Economy4 Factor Intensity In a world of two goods(cloth and food)and two factors(labor and land),food production is land-intensive,if at any given wage-rental ratio the land-labor ratio used in the production of food is greater than that used in the production of cl

6、oth:TF/LF TC/LC Example:If food production uses 80 workers and 200 acres,while cloth production uses 20 workers and 20 acres,then food production is land-intensive and cloth production is labor-intensive.A Model of a Two-Factor Economy6CCFFWage-rental ratio,w/rLand-laborratio,T/LA Model of a Two-Fac

7、tor EconomyFigure 4-2:Factor Prices and Input Choices7 Factor Prices and Goods Prices Stolper-Samuelson Theorem(effect):If the relative price of a good increases,holding factor supplies constant,then the nominal and real return(in terms of both goods)to the factor used intensively in the production

8、of that good increases,while the nominal and real return(in terms of both goods)to the other factor decreases.The reverse is also true.A Model of a Two-Factor Economy8FFCCSSLand-labor Ratio,T/LRelativeprice ofcloth,PC/PFWage-rentalratio,w/r(PC/PF)1(TC/LC)2(TC/LC)1(TF/LF)2(TF/LF)1(w/r)2(w/r)1Increasi

9、ngIncreasingA Model of a Two-Factor EconomyFigure 4-4:From Goods Prices to Input Choices(PC/PF)210 An increase in the price of cloth relative to that of food,PC/PF,will:Raise the income of workers relative to that of landowners,w/r.Raise the ratio of land to labor,T/L,in both cloth and food producti

10、on and thus raise the marginal product of labor in terms of both goods.Raise the purchasing power of workers and lower the purchasing power of landowners,by raising real wages and lowering real rents in terms of both goods.A Model of a Two-Factor Economy11LFTFLCTCLabor used in food productionLabor u

11、sed in cloth productionOFIncreasingIncreasingIncreasingIncreasingLand used in cloth productionLand used in food production1FCOCA Model of a Two-Factor EconomyFigure 4-5:The Allocation of Resources13CL2FL2CT1FT1CF1L1FL1CT2FT2C1A Model of a Two-Factor EconomyFigure 4-6:An Increase in the Supply of Lan

12、dLabor used in food productionLabor used in cloth productionIncreasingIncreasingIncreasingIncreasingLand used in cloth productionLand used in food productionF2O1FO2F2OC15TT1TT2Output offood,QFOutput ofcloth,QCSlope=-PC/PFSlope=-PC/PF2Q2FQ2C1Q1FQ1CA Model of a Two-Factor EconomyFigure 4-7:Resources a

13、nd Production Possibilities16 Assumptions of the Heckscher-Ohlin model:There are two countries(Home and Foreign)that have:Same tastes Same technology Different resources Home has a higher ratio of labor to land than Foreign does Each country has the same production structure of a two-factor economy.

14、Effects of International Trade Between Two-Factor Economies18 Relative Prices and the Pattern of Trade Factor Abundance Home country is labor-abundant compared to Foreign country(and Foreign is land-abundant compared to Home)if and only if the ratio of the total amount of labor to the total amount o

15、f land available in Home is greater than that in Foreign:L/T L*/T*Example:if America has 80 million workers and 200 million acres,while Britain has 20 million workers and 20 million acres,then Britain is labor-abundant and America is land-abundant.In this case,the scarce factor in Home is land and i

16、n Foreign is labor.Effects of International Trade Between Two-Factor Economies19 When Home and Foreign trade with each other,their relative prices converge.The relative price of cloth rises in Home and declines in Foreign.In Home,the rise in the relative price of cloth leads to a rise in the product

17、ion of cloth and a decline in relative consumption,so Home becomes an exporter of cloth and an importer of food.Conversely,the decline in the relative price of cloth in Foreign leads it to become an importer of cloth and an exporter of food.Effects of International Trade Between Two-Factor Economies

18、20RDRSRS*123Effects of International Trade Between Two-Factor EconomiesFigure 4-8:Trade Leads to a Convergence of Relative PricesRelative price of cloth,PC/PFRelative qualityof cloth,QC+Q*C QF+Q*F21 Heckscher-Ohlin Theorem:A country will export that commodity which uses intensively its abundant fact

19、or and import that commodity which uses intensively its scarce factor.Effects of International Trade Between Two-Factor Economies22 Difference between the specific factors model and the Heckscher-Ohlin model in terms of income distribution effects:The specificity of factors to particular industries

20、is often only a temporary problem.Example:Garment makers cannot become computer manufactures overnight,but given time the U.S.economy can shift its manufacturing employment from declining sectors to expanding ones.In contrast,effects of trade on the distribution of income among land,labor,and capita

21、l are more or less permanent.Effects of International Trade Between Two-Factor Economies24 Factor Price Equalization In the absence of trade:labor would earn less in Home than in Foreign,and land would earn more.Factor-Price Equalization Theorem:International trade leads to complete equalization in

22、the relative and absolute returns to homogeneous factors across countries.It implies that international trade is a substitute for the international mobility of factors.Effects of International Trade Between Two-Factor Economies25 Has international trade equalized the returns to homogeneous factors i

23、n different countries in the real world?Even casual observation clearly indicates that it has not.Example:Wages are much higher for doctors,engineers,technicians,mechanics and laborers in the United States and Germany than in Korea and Mexico.Under these circumstances,it is more realistic to say tha

24、t international trade has reduced,rather than completely eliminated,the international difference in the returns to homogeneous factors.Effects of International Trade Between Two-Factor Economies26 Three assumptions crucial to the prediction of factor price equalization are in reality untrue:Both cou

25、ntries produce both goods Both countries have the same technologies in production Both countries have the same prices of goods due to trade One thing the factor-price equalization theorem does not say is that international trade will eliminate or reduce international differences in per capita income

26、s.Effects of International Trade Between Two-Factor Economies28Effects of International Trade Between Two-Factor EconomiesTable 4-2:Composition of Developing-Country Exports(Percent of Total)29Table 4-3:Factor Content of U.S.Exports and Imports for 1962Empirical Evidence on the Heckscher-Ohlin Model

27、31Empirical Evidence on the Heckscher-Ohlin ModelTable 4-4:Testing the Heckscher-Ohlin Model32 Tests on North-South Trade North-South trade in manufactures seems to fit the Heckscher-Ohlin theory much better than the overall pattern of international trade.The Case of the Missing Trade A study by Tre

28、fler in 1995 showed that technological differences across a sample of countries are very large.Empirical Evidence on the Heckscher-Ohlin Model33Empirical Evidence on the Heckscher-Ohlin ModelTable 4-5:Trade Between the United States and South Korea,1992(million dollars)34Empirical Evidence on the He

29、ckscher-Ohlin ModelTable 4-6:Estimated Technological Efficiency,1983(United States=1)35 Implications of the Tests Empirical evidence on the Heckscher-Ohlin model has led to the following conclusions:It has been less successful at explaining the actual pattern of international trade.It has been usefu

30、l as a way to analyze the effects of trade on income distribution.Empirical Evidence on the Heckscher-Ohlin Model36 The Heckscher-Ohlin model,in which two goods are produced using two factors of production,emphasizes the role of resources in trade.A rise in the relative price of the labor-intensive

31、good will shift the distribution of income in favor of labor:The real wage of labor will rise in terms of both goods,while the real income of landowners will fall in terms of both goods.Summary37 For any given commodity prices,an increase in a factor of production increases the supply of the good th

32、at uses this factor intensively and reduces the supply of the other good.The Heckscher-Ohlin theorem predicts the following pattern of trade:A country will export that commodity which uses intensively its abundant factor and import that commodity which uses intensively its scarce factor.Summary38Sum

33、mary The owners of a countrys abundant factors gain from trade,but the owners of scarce factors lose.In reality,complete factor price equalization is not observed because of wide differences in resources,barriers to trade,and international differences in technology.Empirical evidence is mixed on the

34、 Heckscher-Ohlin model.Most researchers do not believe that differences in resources alone can explain the pattern of world trade or world factor prices.39/Units of land used to produce one calorie of food,aTFUnits of labor used to produce one calorie of food,aLF1Isocost linesAppendix:Factor Prices,

35、Goods Prices,and Input ChoicesFigure 4A-1:Choosing the Optimal Land-Labor Ratio40/12Appendix:Factor Prices,Goods Prices,and Input ChoicesFigure 4A-2:Changing the Wage-Rental RatioUnits of land used to produce one calorie of food,aTFUnits of labor used to produce one calorie of food,aLFSlope=-(w/r)2S

36、lope=-(w/r)141FFCCSlope=-(w/r)Appendix:Factor Prices,Goods Prices,and Input ChoicesFigure 4A-3:Determining the Wage-Rental RatioLand inputLabor input42FFCC1Slope=-(w/r)1CC2Slope=-(w/r)2Appendix:Factor Prices,Goods Prices,and Input ChoicesFigure 4A-4:A Rise in the Price of ClothLand inputLabor input43