International Economics
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Dominick-Salvatore-International-Economics
ical Economy, February 1966, pp. 77–80.
Salvatore c05.tex V2 - 10/26/2012 12:56 A.M. Page 155 INTERNet 155 I N T E R N e t A great deal of trade statistics for the United States by country and region can be found through the home page of the U.S. Department of Commerce, International Trade Administration, at: http://www.trade.gov/mas/ian/ Trade statistics for European countries are provided by EuroStat (the Statistical Office of the European Commu- nities) at: http://ec.europa.eu/trade/statistics A wealth of detailed international trade statistics by coun- try, industry, and year for 175 countries and areas is also provided in International Trade Statistics Yearbook , Vol. 1, published by the United Nations at: http://comtrade.un.org/pb/ The IMF publishes the Direction of Trade Statistics (yearly and quarterly) on the volume of trade to and from each of the 187 member countries of the IMF, Click “Direction of Trade Statistics (DOTS)” at: http://www.imf.org/external/data.htm The hourly compensation of U.S. workers in manufactur- ing and how it compares with that of foreign workers is found at: http://www.bls.gov/data/home.htm#international The capital stock per worker of many countries is found on the University of Pennsylvania website at: http://pwt.econ.upenn.edu Salvatore c05.tex V2 - 10/26/2012 12:56 A.M. Page 156 Salvatore c06.tex V2 - 10/16/2012 9:50 A.M. Page 157 Economies of Scale, Imperfect Competition, and International Trade chapter L E A R N I N G G OA L S : After reading this chapter, you should be able to: • Explain how international trade can result from economies of scale • Explain how product differentiation leads to intra-industry trade • Understand the technological gap and product cycle models of trade • Understand the relationship between transportation costs and environmental standards on international trade 6.1 Introduction We have seen in Chapter 5 that the Heckscher–Ohlin theory based comparative advantage on differences in factor endowments among nations. The theory, how- ever, leaves a significant portion of today’s international trade unexplained. In this chapter, we fill this gap with some new, complementary trade theories, which base a great deal of international trade flows on economies of scale, imperfect competi- tion, and differences in the development and spread of new technologies over time among nations. Section 6.2 examines the effect of relaxing each of the assumptions on which the Heckscher–Ohlin theory rests. Section 6.3 examines international trade based on economies of scale. Section 6.4 shows the importance of imperfect competi- tion as the basis of a great deal of today’s international trade. Section 6.5 presents models that base international trade on differences in dynamic changes in technol- ogy among nations. Finally, Section 6.6 examines the effect of transportation costs and environmental standards on the location of industry and the flow of interna- tional trade. The appendix to this chapter examines external economies and their importance for international trade. 157 Salvatore c06.tex V2 - 10/16/2012 9:50 A.M. Page 158 158 Economies of Scale, Imperfect Competition, and International Trade 6.2 The Heckscher–Ohlin Model and New Trade Theories In this section we relax the assumptions of the Heckscher–Ohlin theory discussed in Section 5.2. We will see that relaxing the assumptions does not affect the validity of the basic Heckscher–Ohlin model, but points to the need for new, complementary trade theo- ries to explain the significant portion of international trade that the Heckscher–Ohlin theory leaves unexplained. Relaxing the first assumption (two nations, two commodities, and two factors) to include more than two nations, more than two commodities, and more than two factors, while certainly complicating the analysis, leaves the H–O model basically valid, as long as the number of commodities is equal to or larger than the number of factors. One complication that arises in dealing with more than two factors is that we can no longer classify a com- modity simply as L or K intensive but will require the construction of a factor-intensity index to predict the pattern of trade. This can be complex but should still be possible. The second assumption of the Heckscher–Ohlin theory (i.e., that both nations use the same technology in production) is not generally valid. That is, nations often do use dif- ferent technologies in the real world. However, technology can be regarded as a factor of production, and, as such, trade based on given technological differences among nations could be viewed as falling within the realm of the H–O theory. Trade based on changes in technology over time among nations is a different matter, however. These are explained by the technological gap and product cycle models. While these models could be regarded as dynamic extensions of the basic H–O model, they are in fact different and are discussed in Section 6.5. The third assumption, that commodity X is the L-intensive commodity, while commodity Y is the K -intensive commodity in both nations, implies the absence of factor-intensity reversal. As pointed out in Section 5.6c, factor-intensity reversal would lead to the rejection of the H–O model. Empirical studies, however, indicate that factor-intensity reversal is not very common in the real world. It seems that the Leontief paradox could be eliminated by the inclusion of human capital, the exclusion of commodities intensive in natural resources, and comparing the K/L ratio in production versus consumption rather than in exports versus imports. While the H–O theory assumed constant returns to scale (assumption 4), international trade can also be based on increasing returns to scale. Increasing returns to scale can be regarded as complementary to the H–O theory in that they try to explain a portion of international trade not covered by the basic H–O theory. Economies of scale as a basis for trade are examined in Section 6.3. The fifth assumption of the H–O model was incomplete specialization in both nations. If trade brings about complete specialization in production in one of the nations, relative commodity prices will be equalized, but factor prices will not. For example, if in Figure 5.8 the amount of capital available to Nation 1 is so much less that point B (at which factor prices would be equalized in the two nations) is outside the Edgeworth box for Nation 1 (and therefore unattainable), factor prices will not be equalized in the two nations, even though relative commodity prices are. Assumption 6 on equal tastes has been more or less verified empirically. Tastes are certainly not sufficiently different across nations to overcome differences in the relative Salvatore c06.tex V2 - 10/16/2012 9:50 A.M. Page 159 6.3 Economies of Scale and International Trade 159 Download 7.1 Mb. Do'stlaringiz bilan baham: |
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