Seminar 2 Topics Covered: Heckscher-Ohlin Model Part I and II 1. This exercise uses the Heckscher-Ohlin model to predict the direction of trade. Consider the production of hand-made rugs and assembly line robots in Canada and India. Problem 1 Answer a) Which country would you expect to be relatively labor-abundant? Capital-abundant? Why? Labor-abundant: India. Capital-abundant: Canada b) Which industry would you expect to be relatively labor-intensive? Capital-intensive? Why? Handmade
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B. capitalism C. similar opportunity D. mercantilism E. comparative advantage 5. Which of the following international trade scholars was the first to explain why unrestricted free trade is beneficial to a country? A. Adam Smith B. Bertil Ohlin C. Eli Heckscher D. Paul Krugman E. David Ricardo 6. __________ refers to a situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country
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155) According to the theories of Smith‚ Ricardo and Heckscher-Ohlin‚ if a country can produce a product itself it should not import that product. FALSE Difficulty: Medium 4. (p. 155) The theories of Smith‚ Ricardo and Heckscher-Ohlin tell us that a country’s economy may gain if its citizens buy certain products from other nations that could be produced at home. TRUE Difficulty: Medium 5. (p. 155) The Heckscher-Ohlin theory emphasizes the interplay between the proportions
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relative ratios of labor at which the production of one good can be traded off for another differ between countries and governments Heckscher-Ohlin model Main article: Heckscher-Ohlin model In the early 1900s a theory of international trade was developed by two Swedish economists‚ Eli Heckscher and Bertil Ohlin. This theory has subsequently been known as the Heckscher-Ohlin model (H-O model). The results of the H-O model are that countries will produce and export goods that require resources (factors)
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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. 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
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consumption and trade patterns . It says trade is beneficial to the all participating countries. The Ricardian model and the Hecksher Ohlin model are two basic models of trade and production. In the early 1900s an international trade theory called factor proportions theory emerged by two Swedish economists‚ Eli Heckscher and Bertil Ohlin. This theory is also called the Heckscher-Ohlin
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The Ecuadorian Rose Industry snowcapped volcanoes that rise to more than 20‚000 feet. The bushes are protected by 20-foot-high canopies of plastic sheeting. The combination of intense sunlight‚ fertile volcanic soil‚ an equatorial location‚ and high altitude makes for ideal growing conditions‚ allowing roses to flower almost year-round. Ecuador apparently has a comparative advantage in the production of roses. Ecuador’s rose industry started some 20 years ago and has been expanding rapidly since
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emergence of mercantilist philosophy‚ and the life-cycle of the colonial systems of the European nation-states” (Czinkota‚ Ronkainem‚ Muffett‚ pp128 2009). The following essay will first explore some of the mainstream trade theories‚ such as the Heckscher-Ohlin trade theory and the Gravity model; and the time sequence in which they came about. Trade is argued to produce more gains in the form of increased overall output‚ than in a state of autarky; so the theories go. However‚ this statement will be
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Encourage Exports & Discourage Imports. 2. Absolute Advantage (Adam Smith 1776) Explains why unrestricted free trade is beneficial to a Country. 3. Comparative Advantage (David Ricardo 1817) Efficiency of production. 4. Heckscher–Ohlin Theory (Eli Heckscher 1919 & Bertil Ohlin 1933) The Leontief Paradox (Wassily Leontief 1953) Mercantilism Initial trade theory that formed the foundation of economic thought from 1500 – 1800 Based on concept that a nations wealth is measured by its
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EC 481/581‚ Winter 2011 Prof. Anca Cristea NAME: __________________________ ID #: __________________________ Midterm Exam There are 10 multiple-‐choice questions worth 2 points each; 5 short answer questions worth 4
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