Search

The purpose of this study is to analyse the role of preferences and technological differences between countries in determining dynamics of capital accumulation, wealth and income distribution within countries and between countries, and patterns of trade in a dynamic general equilibrium framework. The model is built by integrating Walrasian general equilibrium, neoclassical growth, and H-O international trade theories. The model is built for any number of countries and each country is composed of three production sectors and heterogeneous households. The national growth mechanism is the same as that in neoclassical growth theory. Labour and capital distributions among sectors and among countries are determined under perfect competition and free trade. The model synthesizes the well-known H-O and the Oniki-Uzawa trade models, Solow-Uzawa neoclassical growth theory, and Walrasian general equilibrium theory with Zhang's utility function. We simulated the model with three national economies and with two groups of households for each country. We identified the existence of equilibrium points and plot motion of the dynamic system. We also conducted a comparative dynamic analysis. [ABSTRACT FROM AUTHOR]

This article is the first empirical attempt using a panel-gravity trade model to analyze the bilateral trade patterns between China and 13 OPEC member countries over the period 1998–2014. Our findings reveal that the gravity equation fits the data reasonably well. We confirm the existence of long-term relationships between the bilateral trade flows and the main components of gravity model-GDP, income (GDPper capita), the difference in income, exchange rate, the openness level, distance, and WTO membership—through the Fixed effects (FE), Random effects (RE), and the FMOLS approaches. The estimation results show that the trade pattern between China and OPEC member countries relies on the Heckscher-Ohlin (H-O) theory, thus being explained by difference in factor endowments such as energy resources and technology. [ABSTRACT FROM PUBLISHER]

Several prominent political economy models of trade policy, at first glance, seem to suggest that leftist governments in Latin America have strong incentives to sign preferential trade agreements (PTAs). The Heckscher–Ohlin model, for instance, predicts that the ideological left in the developing world will favour trade liberalization. Other research, specifically on trade agreements, suggests that leftist governments sign such treaties to credibly signal a commitment to sound economic policies. In light of these predictions, it is perhaps surprising that many left-wing Latin American governments have been especially averse to signing PTAs. In this article, I provide an explanation for the partisan left's disposition toward trade agreements. First, I identify the ways in which PTAs can be difficult to reconcile with hardline or populist left-wing governance. Second, I explore the conditions under which left governments are most inclined to sign trade agreements. I anticipate that regional commonalities and shared partisanship increase the prospects for cooperation. A statistical analysis of PTA signing in 18 Latin American countries, as well as a more in-depth treatment of several cases, yields results consistent with my expectations. These findings have implications for the literature on the political economy of trade agreements as well as the scholarship on globalization in the Latin American context. [ABSTRACT FROM AUTHOR]

We extend the dynamic Heckscher–Ohlin model in Bond et al. [Economic Theory (48, 171–204, 2011)] and show that if the labor-intensive good is inferior, then there may exist multiple steady states in autarky and poverty traps can arise. Poverty traps for the world economy, in the form of Pareto-dominated steady states, are also shown to exist. We show that the opening of trade can have the effect of pulling the initially poorer country out of a poverty trap, with both countries having steady state capital stocks exceeding the autarky level. However, trade can also pull an initially richer country into a poverty trap. These possibilities are a sharp contrast with dynamic Heckscher–Ohlin models with normality in consumption, where the country with the larger (smaller) capital stock than the other will reach a steady state where the level of welfare is higher (lower) than in the autarkic steady state. [ABSTRACT FROM AUTHOR]

Jan Tinbergen, galardonado con el primer Premio Nobel de Economía en 1969, participó a finales de ese mismo año en una reunión de economistas que la OIT había convocado con el fin de fijar las prioridades en materia de investigación del recién creado Programa Mundial del Empleo. En su ponencia Tinbergen examinó la influencia de la política comercial internacional en la capacidad de creación de empleo. En su opinión, las políticas restrictivas — en especial con respecto al comercio de productos agropecuarios y textiles —, así como los obstáculos comerciales con que tropiezan los productos de alto valor añadido, perjudican al comercio basado en ventajas comparativas, según el principio de Heckscher-Ohlin. En el artículo aquí reproducido el autor explica también sobre qué base clasificar las industrias con arreglo a la intensidad relativa de los factores de producción, a fin de lograr una división internacional del trabajo óptima. Destaca sobre todo «que el mayor obstáculo para la buena elección de las industrias más indicadas para los países en vías de desarrollo es en este momento la política comercial restrictiva que siguen los países desarrollados», aunque también critica los obstáculos establecidos por los países menos adelantados. Su sólida argumentación contribuyó a la reducción de los obstáculos al comercio observada desde entonces y consolidó la idea de que puede fomentarse el empleo corrigiendo las deformaciones del sistema comercial. [ABSTRACT FROM AUTHOR]

The index of revealed comparative advantages was first introduced by Liesner (1958) and operationalized by Balassa (1965) in order to measure comparative advantages. The RCA index of a country for a product is often measured by the product's share in the country's exports in relation to its share in world trade. The index of RCA (called the Balassa Index), is used to measure the relative importance of a product in a country's export composition relative to that products's relative importance in world trade or any country. In this study, between the years 2000-2008, indices of the revealed comparative advantages of Turkey and Syria are calculated on SITC Revision3, 2 digit codes and the comparative advantages and disadvantages of countries in question are examined among themselves. Turkey has accordingly got the revealed comparative disadvanteges against Syria (Syria has got the revealed comparative advanteges against Turkey) in 9 of 66 goods. The most goods which Syria has got the revealed comparative advanteges against Turkey are "group 0 (Food and Live Animals)" and " group 2 (Dairy Products and Birds Eggs)". However, in the export of the other goods; Turkey has clearly got the revealed comparative advanteges (in 45 goods, strongly comparative advantages are available) against Syria. [ABSTRACT FROM AUTHOR]

We describe the evolving pattern of European countries' trade using recently developed empirical procedures based on the classic Balassa index. The extent of trade specialization exhibits a declining trend; European countries have lost their comparative advantage in a number of product groups over time. The indices of specialization have also tended to converge. For particular product groups, the indices display greater variation. They are stable for product groups with comparative disadvantage, but product groups with weak-to-strong comparative advantage show significant variation over time. The results reinforce the finding of a general decrease in specialization but do not support the idea of self-reinforcing mechanisms, strongly emphasized in much of the endogenous growth and trade literature. [ABSTRACT FROM AUTHOR]

This paper examines a two-country dynamic general equilibrium model with status-seeking agents. We show that the introduction of status-seeking behavior brings about new properties in equilibrium dynamics. While there exists a continuum of steady states in the standard dynamic models, the present framework demonstrates that, under some conditions, there uniquely exists an incompletely specialized steady state, which is locally saddle-point stable. Therefore, catching-up and overtaking phenomena seen in economic development can be explained, and comparative statics analysis also is made possible. Our comparative statics analysis illustrates, for example, that trade pattern is determined in the Heckscher–Ohlin manner; the patient country acts just like a capital abundant one to export the capital-intensive good. Furthermore, as distinct from the existing literature, the present study shows that the existence of an incompletely specialized steady state can be ensured even if the two countries conduct different policies. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper analyzes the dynamics of a 2× 2× 2 Heckscher–Ohlin model where foreign asset holdings and capital accumulation are independently determined by optimizing agents. Each country has two production sectors, both of whose products are used for consumption, and an investment sector, which uses one of the two commodities to accumulate real capital. In this setting we examine the effects of fiscal spending on the equilibrium paths of interest rates and prices and each country's lifetime utility. The welfare effect is found to consist of the static terms-of-trade effect, the dynamic foreign asset effect and the direct income-loss effect. [ABSTRACT FROM AUTHOR]

The Heckscher-Ohlin theory of comparative advantage was produced as an alternative to the Ricardian model and had an ideological mission: the elimination of the labor theory of value and the incorporation of the neoclassical price mechanism into international trade theory. This article first questions the empirical validity of the Heckscher-Ohlin model and argues that most of the empirical work aimed at proving the validity of the model by focusing on its power to predict trade patterns is irrelevant. Moreover, the dynamic version of the model, which predicts dynamic structural change in the long run, is based on simple empiricism. Second, it exposes the theoretical weaknesses of the model by questioning its treatment of capital and labor. Finally, it challenges the view that the model surpasses the Ricardian model in its ability to predict patterns of trade between low- and high-income countries by demonstrating that the Ricardian model would also anticipate similar trade patterns. [ABSTRACT FROM AUTHOR]

The most popular framework for analyzing the trade-wage linkage is the Heckscher-Ohlin-Samuelson model (HOS), with the celebrated Stolper-Samuelson theorem. Consider two regions the U.S. and the developing countries and two factors of production such as low-skilled and high-skilled workers, or alternatively, low-educated and highly educated workers. High-skilled workers are abundant in the U.S. low-skilled workers are abundant in DC. There are two goods, one skill-intensive in production, and the other low-skill-intensive. HOS theory predicts that, upon an opening of trade between the U.S. and DC, either because of an elimination of protectionism or a fall in transport costs, the following will occur such as the U.S. will export the high-skilled-intensive product and import the low-skilled-intensive product. The relative price of the low-skilled-intensive product will decline in the U.S. The wage of low-skilled labor relative to that of high-skilled labor will decline in the U.S. and employment will shift to the high-skilled-intensive output. Firms in both sectors in the U.S. in response to the falling relative wage of low-skilled workers will raise the proportion of low skilled to high-skilled workers. The HOS theory underlines the linkage between relative output prices and relative wages. In the simple two-sector, two-skill factor model, without specialization, there is a one-to-one relationship between output prices and factor prices, the relative wage of unskilled labor falls if and only if the relative price of low skilled intensive output declines.

The factor price equalization hypothesis is widely at odds with the large variation in factor prices across countries. Similarly, the Heckscher-Ohlin-Vanek (HOV) theorem constitutes an incomplete description of trade in factor services: its predictions are always rejected empirically. These two issues are examined using a modification of the HOV model that allows for factor-augmenting international productivity differences. The empirical results are stark: this simple modification of the HOV theorem explains much of the factor content of trade and the cross-country variation in factor prices. [ABSTRACT FROM AUTHOR]

The article focuses on the factor-proportion model with many nations, goods and factors. Recently, several authors have markedly improved our understanding of the factor-proportions trade model when there are arbitrarily many goods, factors and/or nations. Economist Jaroslav Vanek appears to be the first rigorously to derive theorems, in the spirit of the simple Heckscher-Ohlin theory, concerning the factor content of a nation's total trade. Subsequently, economist Yutaka Horiba has investigated conditions under which Vanek's results hold bilaterally for trade among many nations. Nonetheless, none of these models nor their implications have been subjected to rigorous empirical tests. This paper provides such tests on observed trade patterns among Canada, the U.S. and the rest of the world. The article briefly reviews the Vanek-Horiba version of the factor-proportions model, demonstrating how a nation's total and bilateral net factor-service trade flows are linked to her total and bilateral relative factor endowments. The implications for direct commodity trade are derived problems arising from the absence of some data necessary to empirical implementation of the model has been dealt.

The article focuses on factor endowments, factor proportions and allocative efficiency of the U.S. interregional trade. The Heckscher-Ohlin (H-O) theory of trade has been subjected to numerous international tests. Based upon the empirical evidence presented in the literature, it appears that the theory's explanatory power of the actual pattern of international trade is somewhat limited. This may not be surprising, however, when one considers a host of extraneous factors such as tariffs, quotas and other policy and institutional barriers to trade, which distort the pattern of trade. On the other hand, some of the requisites of H-O theory are more nearly satisfied in interregional trade within a nation. The extent of policy distortions on the overall pattern of commodity trade should be far less in interregional trade than in international trade. Likewise, both production technologies and demand conditions, assumed to be identical between nations in H-O theory should be more nearly so among regions within a nation, while the theoretical basis of regional trade is, of course, the same as that of international trade. In the second section, estimates of the regional distribution of major input supplies in the U.S. are presented.

In a recent paper in this review Batra has explored the implications of production uncertainty for the validity of the Heckscher-Ohlin theorem and its by-product the Rybczynski theorem. We will show that there is an error in one of Batra's equations and that this error, contrary to his claim, invalidates the Rybczynski as well as the HeckscherOhlin theorems. [ABSTRACT FROM AUTHOR]