Factor Proportions, Trade, and Growth

Factor Proportions, Trade, and Growth

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The standard version of the Heckscher-Ohlin model of international trade treats the factors of productiona€”land, labor, and capitala€”as essentially analytically similar and symmetrical. In these six essays Ronald Findlay explores modifications to the factor proportions model, looking in particular at what happens when human capital and land use are allowed to vary endogenously. Findlay extends the factor proportions theory of international trade to consider capital accumulation, income distribution, and factor mobility in a growing world economy. Among the questions he addresses are such fundamental issues as the conditions under which international trade equalizes the rate of interest; the effects of learning and invention on economic growth and comparative advantage; the role of human capital and skill formation in determining patterns of comparative advantage and the reciprocal effect of international trade on these variables through its impact on wage differentials between skilled and unskilled workers; the incorporation of new territories into a trading system by extensions of the frontier and labor migration as in the establishment of the Atlantic economy of the nineteenth century; and the impact of reductions in transport costs of industrial raw materials on global patterns of manufacturing activity and comparative advantage. The Ohlin LecturesConsider now the negatively sloped curve BB in figure 2.3, which shows the level of per capita utility u as a function of ... of X and Y are then known, and the corresponding utility level that the representative consumer enjoys can be read off.

Title:Factor Proportions, Trade, and Growth
Author: Ronald Findlay
Publisher:MIT Press - 1995

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