Source of comparative advantage, International Economics

 

The Source of Comparative Advantage can be understood as follows:

The source of comparative advantage could be productivity differential (Ricardo) or differences in the factor endowments (Hechshcer-Ohlin). In the latter case, given the two countries (one rich in labor and one rich in capital, and a labor-intensive good and a capital intensive good, the labour abundant country will have comparative advantage in production of the labour-intensive good while on the other hand the capital abundant country will have comparative advantage in the capital-intensive good.

The natural policy prescription emanating from above argument was that the LICs which are often abundant in labor should produce primary products while rich countries alone must produce capital-intensive goods.

 

 

Posted Date: 7/19/2012 4:16:24 AM | Location : United States







Related Discussions:- Source of comparative advantage, Assignment Help, Ask Question on Source of comparative advantage, Get Answer, Expert's Help, Source of comparative advantage Discussions

Write discussion on Source of comparative advantage
Your posts are moderated
Related Questions
I want to make a report on Econmomic indicators in financial market

Q. Write about the assumptions of the theory of consumer behavior based on the cardinal utility approach. 1. Rationality- It is assumed that the consumer is a rational being in


what are the aims aond objective and purpose of IMF

Q. Explain why despite enormous natural resources, much of Latin America's population remains in poverty and the region has been repeatedly experiencing financial crises. Answe

Q. Explain how the timing of a balance of payment crisis is determined.  Be careful to state all assumptions.   Answer:  The assumptions of the model are: Prices are el

which book by adam smith explains the absolute advantage ?

Q. The figure below shows the demand and cost functions facing a Brazilian Steel producing monopolist. If it were unable to export, and was constrained by its domestic market, wh

is the stolper samulson theorem is relevant in these days

Q. Using 4 different figures, plot the time paths showing the effects of a permanent increase in the United States money supply on: A. U.S. money supply. B.