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According to the popular Heckscher-Ohlin model of international trade, a country is expected to export (import) those products whose production requires the intensive use of the factor of production that is in relative abundance (scarcity). Leontief (1953), using input-output data of the US economy for the year 1947, found that the US, an overwhelmingly capital-abundant country, exported labour-intensive products and imported capital-intensive ones. Clearly, the results contradicted the predictions of the Heckscher-Ohlin model and they were characterised as 'Leontief's paradox'. A number of explanations for the so-called paradox were offered and this paper briefly, but critically, evaluates these explanations as it examines whether or not Leontief's results persist in the case of the US economy during the period 1998-2012. [ABSTRACT FROM AUTHOR]

India's engagement with West Asia including Iran has always been a balancing act hovering between economic necessities and strategic pursuits. The paper briefly traces the evolution of Indo-Iran engagements and also analyses their respective macroeconomic parameters. It also outlines and discusses three major geopolitical and geo-economic influences including sanctions on Iran, payment mechanism, and Iran's business environment. Moreover, the issues pertaining to access to oil, transit route through Afghanistan and other trade facilitation measures have also been discussed. The paper also uses the revealed comparative advantage index to identify some potential areas of cooperation. Also, it argues that India needs to be more cautious and pragmatic in its strategic endeavours. [ABSTRACT FROM AUTHOR]

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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]

The history of mankind is replete with the issue of conflicts and wars. War has been throughout history a normal way of conducting disputes between political groups and nations. It seems that no human activity can be actualized without an element of conflict since there have always been differences in preferences in beliefs, religion, policies and approach to fundamental issues affecting different individuals/nations. The fact that comparative advantage of materials and human resources are more in favour of certain groups than the others makes conflicts concurrently palpable in human relations. It is therefore absolutely impossible for any nation to maintain a policy of isolation without interaction with other nations; and the process of interaction leads to disagreements. It is in the course of inter-group relations that conflict erupts, especially where the rules binding such a relationship are not well defined and properly understood. Although, we sometimes attribute conflicts to heterogeneity of societies but we must also not forget the paradox that most disastrous conflicts of our time emanated from homogeneous societies such as the war we are witnessing in Somalia where the people have a common language, cultural affinities and historical heritage. The main thrust of this paper is to critically assess the concept of the new kind of war that is rampart in Africa. [ABSTRACT FROM AUTHOR]

This study was carried out to determine the contributors to value-addition in the processing of paddy rice into basic milled rice and value-added rice as well as analyze the comparative advantage and competitiveness of rice processing in Nigeria. The extent of policy distortion and agricultural protection was also determined by the study. The data were collected from Ebonyi State, Nigeria, a major rice processing state with 850 registered small-scale processors. Data from other secondary sources were also used. The main analytical framework used was the Policy Analysis Matrix (PAM). The policy distortions were measured through Nominal Protection Coefficient (NPC) and Effective Protection Coefficient (EPC). Private Profitability Coefficient (PPC) was used to measure the comparative advantage a processor has in producing value-added rice while the Domestic Resource Cost ratio (DRC) was selected as the measure of the comparative advantage Nigeria has in producing the commodity. The results show that the total value addition in the processing of paddy rice into basic milled rice was N20,000 or 20% of the output value while the total value addition in the processing of basic milled rice into value-added rice was about N21,500 or 17% of the output. The margin derivable from the processing of paddy rice into basic milled rice was N1,660 per tonne of basic milled rice while further processing of basic milled rice into valueadded rice yielded N7,667 as the margin per metric tonne of value-added rice. Financing, milling and margin are major contributors to value-additions. PAM results show that the price of value-added rice has been kept higher than the world price through policy interventions as the NPC for output was 1.74. Government policy has, therefore, provided incentives to processors of paddy rice into value-added rice. Farmers producing paddy rice also benefited from Government protection as captured by NPC for tradable inputs, which was 1.27; paddy rice being the main tradable input into rice processing operations Though it was profitable for a producer to process paddy rice into value-added rice given the policy environment, Nigeria has no comparative advantage in processing paddy rice into value-added rice, as the DRC was 4.88. [ABSTRACT FROM AUTHOR]

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Dongguan, an emerging world-famous manufacturing metropolis in South China has attracted considerable attention of both academic and policy research over the past two decades. Industrial clusters driven by the influx of foreign direct investment (FDI) in Dongguan have been primarily based on qualitative analysis, while without any differentiations of the sources of FDI. Based on the firm-level statistical data and on-site investigation, this study attempts to explore quantitatively and comparatively the extent and patterns of industrial agglomerations of Hong Kong and Taiwan manufacturing investment in Dongguan. Through comprehensive town-level quantitative analysis, the paper exemplifies that Hong Kong and Taiwan manufacturing agglomerations in various towns of Dongguan that have evolved in different sectoral and spatial patterns. Being consistent with the earlier qualitative analysis, the distinctive trajectories could be interpreted by the different firm linkages and comparative advantages of Hong Kong and Taiwan as source regions, as well as the distinct interactions with Dongguan as host region in the context of global economy. [ABSTRACT FROM AUTHOR]

This study, through bibliometric data, adopts the concept of Revealed Comparative Advantage (RCA) to apply in publication of scientific fields for observing the feature of scientific capacity of a nation. Following that, we utilize a hierarchical clustering method to conduct national clustering according to the RCA scores of publication in 24 scientific fields of each nation. A nation can thoroughly review its relative position, identify other nations with the same characteristics, and understand different clusters' features of scientific capacity. The result also provides a reference that enables researchers to review, explore, and learn about the factors behind the innovation system in the representative clusters or nations. By leveraging the clustering result, this knowledge also allows the nation to grasp opportunities to create innovation by cooperating with other nations that have different comparative advantages. As a result, by accumulating innovation capacity in these research network collaborations, the nation can maintain its innovation momentum and then forge into the innovation lead constantly. [ABSTRACT FROM AUTHOR]

The change of Balassa's 'revealed comparative advantage' index is often directly used to measure comparative advantage variation over time, yet the theoretical foundation of this traditional measure has not been clarified. In this article we derive a 'revealed comparative advantage variation' index, which turns out to be a more general measure of comparative advantage variation than the traditional one. [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]

In this article we investigate the empirical relationship between overall specialization and per capita income. The metric we use to measure overall specialization is the median of the sectoral distribution of the Balassa Index of Revealed Comparative Advantages applied to four-digit (SITC rev.2) sectoral export manufactured data for 39 countries over the period 1985 to 2001. Once we take into account countries' specificities using fixed effects GAM, the results of the semiparametric analysis indicate that sectoral diversification of manufactured exports increases monotonically with development, and thus the reconcentration observed at high levels of income in the recent literature may not be linked to trade-induced specialization. [ABSTRACT FROM AUTHOR]

This paper analyzes trade balances and unit values in Hungarian and Slovenian bilateral agricultural, food, and forestry trade with Austria, Germany, and Italy, respectively, to distinguish types of one-way and two-way trade flows, categories of price competition, and categories of quality competition. Two-way trade flows prevail among trade types. In two-way bilateral trade, categories of price competition prevail over categories of nonprice competition, but vary across trading partners. In Hungarian trade, successful price and quality competition prevail, suggesting comparative advantages for Hungarian produce arising from available agricultural factor endowments and technological improvements in processing compared with bilateral EU trading partners. In Slovenian two-way trade, unsuccessful price and quality competition prevail, suggesting comparative trade disadvantages arising from agricultural and structural disadvantages compared with bilateral EU trading partners. Looking dynamically, we find no significant catch-up in successful competition, as for Hungary, both successful price and successful nonprice competition increased only for Austria, but deteriorated for Germany and Italy. For Slovenia, successful price and nonprice competition remain at a similar level as Austria, but decline compared with Germany and Italy. The probability of remaining one-way trade is greater than the probability of staying within the same competition category in two-way trade. There are differences across countries and over individual years, but the mobility indices indicate decline in trade flow mobility, and thus, more stable trade patterns over time. [ABSTRACT FROM AUTHOR]

Is a country's ability to enforce contracts an important determinant of comparative advantage? To answer this question, I construct a variable that measures, for each good, the proportion of its intermediate inputs that require relationship-specific investments. Combining this measure with data on trade flows and judicial quality, I find that countries with good contract enforcement specialize in the production of goods for which relationship-specific investments are most important. According to my estimates contract enforcement explains more of the pattern of trade than physical capital and skilled labor combined. [ABSTRACT FROM AUTHOR]

This paper examines the effects of the European integration process on Greece's intra-EU vis-à-vis extra-EU intra-industry trade (IIT) patterns over the 1981-2002 period and assesses the associated trade-induced structural adjustment costs. Furthermore, the trade developments between Greece and the Central and Eastern European Countries (CEECs) during the last decade are also examined. Our results indicate that intra-EU and extra-EU IIT in Greece exhibit diverging trends. IIT outside the EU is higher and displays a significant upward trend, whereas the extent of intra-EU IIT of Greece is generally lower and shows a decreasing trend. Comparative advantage considerations seem to determine Greece's intra-EU and extra-EU IIT. Greece's IIT with the CEECs is particularly low and to some extent declining. Our analysis suggests increasing inter-industry specialization and trade-induced adjustment costs for Greece's trade with the EU-15 and the new members. [ABSTRACT FROM AUTHOR]

The paper analyses the evolution of the trade specialization pattern in the new EU member states. Relying on the empirical approach of the Markov transition matrices it analyses both the changes in the external shape of the distribution of comparative advantages and the intra-distribution dynamics. The new members show a dynamic trade pattern: they gained comparative advantages relatively fast in sectors in which they were lagging behind at the beginning of the transition, notably in some ‘high tech’ products. In addition, many specialization improvements occurred in those items for which world demand expanded at the fastest rate over the nineties. [ABSTRACT FROM AUTHOR]

Applying Burgstaller's Ricardian two-sector growth model to the two-country open economy, this paper shows that the long-run Heckscher–Ohlin theorem holds also in a Ricardian world. In addition it is shown that, if two Ricardian countries that are different only in their demand parameters open trade, comparative advantage and the corresponding trade pattern at trade opening continue in the long run after the opening of trade. [ABSTRACT FROM AUTHOR]

This article analyses the complex interplay of various factors in the‘late marketisation’ in China and Vietnam and the‘late industrialisation’ in Korea, Taiwan and Japan. The article distinguishes the degree of‘comparative advantage-defying’ and‘comparative advantage-following’ strategies adopted, and thereby explains the different growth and transition records in the two groups of countries. The article also links the choice of reform strategies to the initial conditions, and attributes the post-transition economic record to the policies adopted. The differences in the allocation of rents and the principal ways in which market discipline was introduced are also discussed. [ABSTRACT FROM AUTHOR]

Copyright of Futuribles is the property of Futuribles SARL 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 examines how factor proportions determine the structure of commodity trade. It integrates a many-country version of a Heckscher-Ohlin model with a continuum of goods with Paul R. Krugman's (1980) model of monopolistic competition and transport costs. The commodity structure of production and bilateral trade is fully determined. Two main predictions emerge. Countries capture larger shares of world production and trade of commodities that more intensively use their abundant factors. Countries that rapidly accumulate a factor see their production and export structures systematically shift towards industries that intensively use that factor. Both predictions receive support from detailed trade data. [ABSTRACT FROM AUTHOR]

We examine empirical relevance of three alternative asymptotic approximations to the distribution of instrumental variables estimators by Monte Carlo experiments. We find that conventional asymptotics provides a reasonable approximation to the actual distribution of instrumental variables estimators when the sample size is reasonably large. For most sample sizes, we find Bekker asymptotics provides reasonably good approximation even when the first stage R² is very small. We conclude that reporting Bekker confidence interval would suffice for most microeconometric (cross-sectional) applications, and the comparative advantage of Staiger and Stock asymptotic approximation is in applications with sample sizes typical in macroeconometric (time series) applications. [ABSTRACT FROM AUTHOR]

The article focuses on the contributions of economists Eli Heckscher and Knut Wicksell on the theory of foreign trade. According to the author, Wicksell's trade theory of 1896 should be distinguished from the later contributions by Heckscher. Specialization in agriculture by the colonial country is of course related to the abundance of land, but there is no general derivation of comparative advantages from relative factor scarcities. Factor price equalization is not mentioned by Wicksell. Changes in relative factor prices and income distribution are only derived directly from changes in agrarian employment at increasingly diminishing returns. Heckscher's formulation of the factor price equalization theorem rested on some presumptions--besides that of factor immobility--that should be stressed here. By the effects on the distribution of income was meant the effects on factor prices, that is, on the functional distribution of income. As to personal incomes, Heckscher only assumed, for the sake of relevance, that factors were not equally distributed.

This article focuses on the theory of comparative advantage for students. The concepts of the theory of comparative advantage are often difficult for students to grasp. Textbook presentations do not seem to be straightforward enough for immediate understanding. Even though students tend to shy away from mathematics, the use of algebraic language could help to clarify the concepts. Most texts illustrate the theory with a numerical example and use verbal explanation without any algebraic expressions. Another point often unclear to students has to do with domestic production under complete specialization. Even though students are told not to add up apples and oranges, they nevertheless often have nagging doubts as to why specialization in the wrong commodity is disadvantageous, especially if the total quantity of the two goods produced under wrong specialization appears to be greater than under correct specialization. A numerical example of wrong specialization will show both countries to be economically worse off with trade than in their original positions without trade. Such academic exercises can be highly rewarding to students' understanding of the theory of comparative advantage.

Ever since the end of World War II the U.S. import markets, especially those for labor-intensive standardized manufactures, have been opened up for imports from developing countries in order to assist economic development abroad. The Asian economies, in particular, are the most active exploiters of this trade-as-aid policy of the United States formulated along the free trade doctrine of comparative advantage. As Japan graduated from the early postwar labor-driven exports and moved up to higher phases of industrialization (to scale-driven, assembly-driven, and currently knowledge-driven), other Asian economies, first the newly industrialized economies (NIEs) and then the Association of Southeast Asian Nations (ASEAN) countries and China, have been capturing those low-end U.S. import markets in tandem, thereby creating the phenomenon of comparative advantage recycling. Some revealed patterns are examined. [ABSTRACT FROM AUTHOR]

There are two principal theories of why countries trade: comparative advantage and increasing returns to scale. Which is most important in practice? The large volume of intra-OECD trade is frequently cited as critical evidence on this question. It is argued that comparative advantage, unlike scale economies, is incapable of accounting for the large volume of trade between seemingly similar economies. This is a theoretical claim. In this paper, I show that it is possible to give an account of this trade based on comparative advantage. The elements that may give rise to a large volume of North-North trade are traced to identifiable features of technology and endowments. [ABSTRACT FROM AUTHOR]

This article presents the text of a report by the American Accounting Association on its proposed activities in the U.S. for 1976 to 1986. The American Accounting Association is a scholarly organization devoted to the development of academic and professional accounting. It exists to serve the needs of its current and future members and to contribute to the overall well-being of society. Endeavoring to further these policies, certain proposals for Association activities are outlined in the next few paragraphs. There are many policy and procedural implications for the Association if it adopts the foregoing posture, but adopting the viewpoint that anything that concerns the subject matter of accounting should be of concern to the Association does not commit it to perform duplicative tasks or undertake projects for which it has no comparative advantages. For example, adopting a broad approach to the Association's activities would not commit it to attempt to duplicate the efforts of the American Institute of CPAs or other accounting related organizations.

The article focuses on the Heckscher-Ohlin theorm in the multi-commodity case. Economist Ronald Jones, in his seminal paper on Heckscher-Ohlin theory, has argued that for the case of two countries, two factors and several commodities, the Heckscher-Ohlin theorem would certain valid in the following weak sense: "Ordering the commodities with respect to the capital-labor ratios employed in production is to rank them in order of comparative advantage. Demand conditions merely determine the dividing line between exports and imports, it is not possible to break the chain of comparative advantage by exporting, say the third and fifth commodities and importing the fourth when they are ranked by factor intensity" Furthermore, as Jones had pointed out if transport costs is introduced, the theorem can be revalidated. With transport costs on every commodity, commodity prices would no longer be equal across countries in trade, and therefore factor prices also could not be equalized via commodity price equalization. Thus, while a commodity in the middle of a chain of exportables may be priced out of the export market into being a non-traded good by high transportation costs, it is impossible for it to be turned into an imported good.

This article focuses on the paper "Industry Export Performance: Assessment and Prediction," by Igal Ayal that was published in the Summer 1982 issue of the periodical "Journal of Marketing." Ayal presents a methodology for identifying industries with high export potential, a process useful for government and corporate planners. The study employs data for 65 Israeli manufacturing industries and U.S. and OECD data for the same industries. The analytical process involved three major steps. The first involved the development of a composite measure of export performance and its use to develop ratings for the 65 Israeli industries. In the second step comparative advantage and factor endowment considerations were employed to develop a set of specific hypotheses regarding the determinants of Israeli industry export success. Regression analysis was used to find relative weights as success predictors for 11 inherent industry characteristics, as measured on a large U.S. database. The third analytical step involved the study of imports by three major parts of the developed free world: the U.S., the European Economic Community and the other members of the Organization for Economic Cooperation and development. For each one of these, regression analysis of import size against the same set of industry characteristics employed above was used to find the determinants of industry import size; these were compared to the determinants of Israeli industries' success in exports.