Source of comparative advantage, International Economics

Assignment Help:

 

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.

 

 


Related Discussions:- Source of comparative advantage

Offer Curve.., How to derive offer curve and its difference from reciprocal...

How to derive offer curve and its difference from reciprocal demand curve

External economic environment, The hospital, as an open system, affects and...

The hospital, as an open system, affects and is affected by the surrounding environment; it is incumbent on staff to monitor and continuously track the variables contained in order

Balance of payments deficits, Q. Refute the claim by mercantilists who clai...

Q. Refute the claim by mercantilists who claimed that without severe restrictions on international trade and payments, a country might find itself impoverished and without an adequ

Opportunity cost thoery, what are the criticisms of OPPORTUNITY COST THEORY...

what are the criticisms of OPPORTUNITY COST THEORY of international trade propounded by PROF.HABERLER and OHLIN

What are the main weaknesses of the east asian economies, Q. Based on the 1...

Q. Based on the 1997 Crisis and your own experience, what are the main weaknesses of the East Asian economies? Answer: The limitation is little productivity increases most of

Rasons for economic miracle of east asian countries, Q. Illustrate the rea...

Q. Illustrate the reasons for the economic "miracle" of the East Asian countries between 1960 and 1997. Is it only due to the common Asian practice of industrial policy and busin

TRIPs, Describe the important benefits enjoyed by Indian companies through ...

Describe the important benefits enjoyed by Indian companies through TRIPs. Elaborate the main objectives of WTO in global economy.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd