國貿(mào)理論與政策Neoclassic trade theory.ppt

1、Ch5. Neo-Classic Trade Theory,“The principal prinspl criterionkraitirin used to differentiate one region from another is its endowment with factors of production.” -Bertil Ohlin,2020/7/24,Ch5. Neo-Classic Trade Theory,Heckscher and Ohlin The assumptions of H-O model The basic concepts of H-O model H

2、-O theorem H-O-S theorem S-S theorem Rybczynski Theorem Leontief paradox The extension of H-O model: Specific factor model The comparison between classic and neo-classic trade theory,2020/7/24,3,Eli Filip Heckscher (1879-1952),Heckscher worked so hard in his life, till 1949, he had published 1148 bo

3、oks and articles, among which may be mentioned his study of Mercantilism, translated into several languages.,Eli Filip Heckscher was a Swedish political economisti:knmist and economic historian. He studied at university in Uppsala烏普薩拉大學（瑞典）and Gothenburg哥森堡, completing his PhD in Uppsala in 1907. He

4、 was professor of Political Economyiknmi and Statistics統(tǒng)計學 at the Stockholm (the capital of Sweden)斯德哥爾摩School of Economics from 1909 until 1929, when he exchanged that chair for a research professorship教授之職 in economic history, finally retiring as emeritus imerits榮譽退職的 professor in 1945.,In 1919, H

5、eckscher published a research paper in Swedish The Effect of Foreign Trade on the Distribution of Income, in which he introduced basic ideas about how to put trade on the basis of a countrys factor endowment.,2020/7/24,4,Bertil Ohlin (18991979),Bertile伯蒂Ohlin was born into an upper-middle class fami

6、ly in a village in the South of Sweden. He got his B.A.(Bachelorbtl of Arts文學士) from Lund University蘭德大學（瑞典top76） in 1917, M.A. (master of arts文學碩士 )from Harvard in 1923, and Ph.D from Stockholm University in 1924. In 1925 Ohlin became a professor at the University of Copenhagen(哥本哈根,丹麥首都 ). In 1930

7、 he succeeded接替 Eli Heckscher, his teacher, as a professor of economics, at the Stockholm School of Economics.,Ohlins results were firstly published in his doctoral dissertation in Swedish, Theory of Trade in 1924, and afterward, far more fully in his well known book in the Harvard Economic Series,

8、Interregional and International Trade in 1933.,Jointly won Nobel prize for economics with James Edward Meade in 1977.,In this Ohlin built an economic theory of international trade from earlier work by Heckscher and his own doctoral thesis. It is now known as the Heckscher-Ohlin Model, one of the sta

9、ndard model economists use to debate trade theory.,2020/7/24,Ch5. Neo-Classic Trade Theory,Heckscher and Ohlin The assumptions of H-O model The basic concepts of H-O model H-O theorem H-O-S theorem S-S theorem Rybczynski Theorem Leontief paradox The extension of H-O model: Specific factor model The

10、comparison between classic and neo-classic trade theory,2020/7/24,The assumptions of H-O model,Two-country (A and B), two-goods (X and Y), two-factor (K and L) (222 model); Two countries use the same technology; X: labor-intensive, Y: capital-intensive; Constant return to scale; Incomplete specializ

11、ation; Two countries have the same tastes; Perfect competition; Factors can mobile within countries, not mobile cross countries; No any barriers; Full employment; Trade balance.,2020/7/24,Ch5. Neo-Classic Trade Theory,Heckscher and Ohlin The assumptions of H-O model The basic concepts of H-O model H

12、-O theorem H-O-S theorem S-S theorem Rybczynski Theorem Leontief paradox The extension of H-O model: Specific factor model The comparison between classic and neo-classic trade theory,2020/7/24,Basic concepts (1),Factor intensity (要素密集度) In a world of two goods (X and Y) and two factors (K and L), if

13、 KX/LX KY/LY we say that X is labor-intensive, Y is capital-intensive. Attention: the important is K/L ratio, not the absolute quantity of K and L.,2020/7/24,Factor Intensities for Commodities X and Y in Nations 1 and 2,Why does N2 use more K-intensive production in both commodities? Capital must be

14、 relatively cheaper in N2 than in N1.,2020/7/24,Basic concepts (2),Factor abundance (要素豐裕度) Physical definition （實物定義） if (TK/TL)A (TK/TL)B, then A is labor abundant, B is capital abundant.,2020/7/24,Basic concepts (2) cont.,Relative factor price (相對要素價格) if (PK/PL)A(PK/PL)B, then A is labor abundan

15、t, B is capital abundant.,2020/7/24,The Shape of the Production Frontiers of Nation 1 and Nation 2,N1: L-abundant nation; X: L-intensive; N2: K-abundant nation; Y: K-intensive.,2020/7/24,Relative Resources Endowments of Various Countries and regions,2020/7/24,Capital-Labor Ratio of Selected Countrie

16、s (in 1990 dollars price),2020/7/24,Ch5. Neo-Classic Trade Theory,Heckscher and Ohlin The assumptions of H-O model The basic concepts of H-O model H-O theorem H-O-S theorem S-S theorem Rybczynski Theorem Leontief paradox The extension of H-O model: Specific factor model The comparison between classi

17、c and neo-classic trade theory,2020/7/24,Contents of the H-O theory,A nation will export the commodity whose production requires the intensive use of the nations relatively abundant and cheap factor and import the commodity whose production requires the intensive use of the nations relatively scarce

18、 and expensive factor. In short, the relatively Labor-rich nation exports the L-intensive commodity and import K-intensive commodity.,2020/7/24,General Equilibrium Framework of the H-O Theory,2020/7/24,圖示 Illustration of H-O Theory,isolation,trade,Same taste,2020/7/24,Illustration of H-O Theory (con

19、t.),Attention: it is not necessary for H-O theory to require the same taste; if tastes differ, they do not differ sufficiently to neutralize抵消 the tendency of different relative commodity prices.,2020/7/24,Ch5. Neo-Classic Trade Theory,Heckscher and Ohlin The assumptions of H-O model The basic conce

20、pts of H-O model H-O theorem H-O-S theorem S-S theorem Rybczynski Theorem Leontief paradox The extension of H-O model: Specific factor model The comparison between classic and neo-classic trade theory,2020/7/24,H-O-S theorem (1),P. Samuelson published International Trade and the Equalization of Fact

21、or Prices (1948) and International Factor-Price Equalization Once Again(1949), the latter had been included in Readings in International Economics (1968) edited by American Economic Association. Samuelson systematically proved the basic principle of factor endowment theory by a rigorous嚴密的 mathemati

22、cal approach and introduced his contributive ideas about the theory. Therefore, factor-price equalization theorem is sometimes known as Heckscher-Ohlin-Samuelson Model or “H-O-S Model”.,Paul Samuelson (1915-),2020/7/24,H-O-S theorem (2),International trade will bring about equalization in the relati

23、ve and absolute returns to homogeneous ,hmdi:nis同質(zhì)的factors across nations. As such, international trade is a substitute for the international mobility of factors. Returns to homogeneous factors: w: the wages of homogeneous labor r: the returns to homogeneous capital,2020/7/24,Logics of H-O-S theorem

24、,A (L-abundant) Lower W,Export X (labor-intensive),Increase production for export,Increase demand for labor,Price of labor rising,2020/7/24,Relative factor-price equalization (1),2020/7/24,Relative factor-price equalization (2),2020/7/24,Formal Proof of the Factor-Price Equalization,N1: labor abunda

25、nt; N2: capital abundant Autarky: (K/L)1(K/L)2, (w/r)1(w/r)2 N1 specializes in X, N2 in Y N1: (K/L)1 and (w/r)1 increase; N2: (K/L)2 and (w/r)2 decrease (K/L)1=(K/L)2, (w/r)1=(w/r)2,autarky,autarky,2020/7/24,Absolute factor-price equalization,Absolute equalization means: the real wages for the same

26、type of labor in two nations and the real rate of interest for the same type of capital in the two nations.,2020/7/24,Hourly compensation costs for production workers in manufacturing (2005),Resource: U.S. Department of Labor.,2020/7/24,It is more realistic to say that international trade has reduce

27、d, rather than completely eliminated the international difference in the returns to homogeneous factors.,2020/7/24,2020/7/24,Ch5. Neo-Classic Trade Theory,Heckscher and Ohlin The assumptions of H-O model The basic concepts of H-O model H-O theorem H-O-S theorem S-S theorem Rybczynski Theorem Leontie

28、f paradox The extension of H-O model: Specific factor model The comparison between classic and neo-classic trade theory,Four theorems of international trade,2020/7/24,W. W. Leontief was an economist who won a Nobel Prize in Economics in 1973 for his work on input-output tables. Input-output tables a

29、nalyze the process by which inputs from one industry produce outputs for consumption or for inputs for another industry. With the input-output table, one can estimate the change in demand for inputs resulting from a change in production of the final good.,Wassily Wassilyovitch Leontief,(19051999),Le

30、ontief used input-output analysis to study the characteristics of trade flow between the U.S. and other countries, and found what has been named Leontiefs paradox; this country resorts訴諸,憑借 to foreign trade in order to economize節(jié)約 its capital and dispose處置 of its surplus labor, rather than vice vers

31、a, i.e., U.S. exports were relatively labor-intensive when compared to U.S. imports. This is the opposite of what one would expect, considering the fact that the U.S.s comparative advantage was in capital-intensive goods.,2020/7/24,Leontiefs First Test,One million dollars worth of typical exportable

32、 and importable in 1947,(K/L)x = Kx / Lx = $14,300 (K/L)m = Km / Lm = $18,200 The US is believed to be endowed with more capital per worker than any other country in the world in 1947. Thus, the H-O theory predicts that the US exports would have required more capital per worker than US imports. Howe

33、ver, Leontief was surprised to discover that US imports were 30% more capital-intensive than US exports, (K/L)m = 1.30 (K/L)x .,(See: W. Leontief, Domestic Production and Foreign Trade: The American Capital Position Re-examined, Proceedings of the American Philosophical,filsfikl Society 97, Septembe

34、r 1953.),2020/7/24,Leontiefs Second Test,One million dollars worth of typical exportable and importable in 1951,(K/L)x = Kx / Lx = $12,970 (K/L)m = Km / Lm = $13,711 (K/L)m = 1.057 (K/L)x,In 1956 Leontief repeated the test for US imports and exports which prevailed in 1951. In his second study, Leon

35、tief aggregated industries into 192 industries. He found that US imports were still more capital-intensive than US exports. US imports were 5.7% more capital-intensive. The degree had been reduced but the paradoxical conclusion remained.,(See: W. Leontief, Factor Proportions and the Structure of Ame

36、rican Trade: Further theoretical and empirical analysis, Review of Economics and Statistics 38, no. 4 November 1956.),2020/7/24,Leontiefs Comments on His Discovery,Facing such a stare tongue-tiedttaid (因膽怯等)說不出話的 paradoxical conclusion Leontief surprisingly pointed out: “These figures show that an a

37、verage million dollars worth of our exports embodies體現(xiàn)；包含 considerably less capital and somewhat有點,稍微more labor than would be required to replace from domestic production an equivalent amount of our competitive imports”. “ Americas participation in the international division of labor is based on its

38、 specialization on labor intensive, rather than capital intensive, lines of production”. “In other words, this country resorts to foreign trade in order to economize its capital and dispose of its surplus labor, rather than vice versa”. “The widely held opinion thatas compared with the rest of the w

39、orldthe United States economy is characterized by a relative surplus of capital and a relative shortage of labor proves to be wrong. As a matter of fact, the opposite is true”.,Who can tell me who I am?,2020/7/24,Is the Leontiefs paradox true?,Baldwin Test (Professor Robert E. Baldwin (1971) used th

40、e 1962 US trade statistics to almost entirely repeat what Leontief did by using the data of 1947 and 1951):,(K/L)m = 1.251 (K/L)x, in consistent with Leontiefs paradox.,Support H-O theory,2020/7/24,Is the Leontiefs paradox true? (cont.),Tests on Global Data (This study confirms the Leontief paradox

41、on a broader level),2020/7/24,Is the Leontiefs paradox true? (cont.),Trade Between the United States and South Korea, 1992 (million dollars): North-South trade in manufactures seems to fit the Heckscher-Ohlin theory much better than the overall pattern of international trade.,2020/7/24,How to unders

42、tand Leontiefs paradox?,Factor Intensity Reversal (要素密集度逆轉(zhuǎn)) Demand bias (需求偏好論) Trade barriers (貿(mào)易壁壘論) Natural resources (自然資源論) Heterogeneous ,hetrudi:nis labor (勞動力不同質(zhì)論) Human capital (人力資本論),2020/7/24,Factor Intensity Reversalriv:sl,refers to the situation where a given commodity is the L-intensi

43、ve commodity in the L-abundant nation and K-intensive commodity in K-abundant nation. The elasticity of substitution: measures the degree or ease with which one factor can be substituted for another in production as the relative price of factor declines. It is more likely to occur the greater is the

44、 difference in the elasticity of substitution of L for K in the production.,2020/7/24,Factor Intensity Reversal (cont.),So, X is L-intensive in N1 and K-intensive in N2.,2020/7/24,A case: Agriculture is labor-intensive in India but capital-intensive in the United States.,Since India is surely a labo

45、r abundant country agricultural production in India must be a typical labor-intensive process. While because of very relatively high wage rate and a relatively low price of capital the United States tends to substitute labor input with a great deal of agricultural machinery.,If the United States imp

46、orts agricultural products from abroad, then it looks like to import some capital-intensive goods, a Leontief paradox occurs in the US, because a false appearance shows that a capital abundant country is importing capital-intensive products. If the United States exports agricultural products to Indi

47、a, that is true in the US-Indian bilateral trade, then a Leontief paradox occurs in India, because a widely recognized labor-abundant country, India, is importing some labor-intensive goods.,2020/7/24,How prevalentis Factor-intensity Reversal?,When factor-intensity reversal is present, neither the H

48、-O theorem nor the factor-price equalization theorem holds. The factor-intensity reversal does occur in the real world is beyond doubt. The frequency of factor reversal in the real world is an empirical question(經(jīng)驗問題): 1%. So, the factor intensity reversal cant explain effectively the Leontiefs para

49、dox.,2020/7/24,How to understand Leontiefs paradox?,Factor Intensity Reversal (要素密集度逆轉(zhuǎn)) Demand bias (需求偏好論) Trade barriers (貿(mào)易壁壘論) Natural resources (自然資源論) Heterogeneous labor (勞動力不同質(zhì)論) Human capital (人力資本論),2020/7/24,Demand Bias,Stefan Valavanis-Vail might be a pioneer of this approach. In 1954 he

50、 suggested a hypothesis of consumption structures. He argued that there would be possibility in the real world that a capital abundant country did not need to export capital-intensive good if her tastes are strongly biased toward capital-intensive goods. Equivalently, a labor abundant country would

51、import labor-intensive goods from abroad if residents of this country had a very strong bias toward consumption of labor-intensive goods. Thus, Leontief Paradox can be explained if the US had a strong consumption bias toward the capital-intensive goods. But in many countries the demand bias is simil

52、ar (Houthakker, 1957).,See: Stefan ValavanisVail, Leontiefs Scarce Factor Paradox，Journal of Political Economy, Vol. 62，Dec. 1954. H. S. Houthakker, An International Comparision of Household Expenditure Patterns, Commemorating the Centenarysenti:nri百年紀念 of Engels Law，Econometrica, Vol. 25, Oct. 1957

53、. Staffan Linder, An Essay on Trade and Transformation, Stockholm, Almquist and Wikell, 1961.,2020/7/24,Statistics show that the industrial developed countries, typically the United States, indeed have a strong consumption preference to some high quality and thus expensive luxurylkrigoods (A relativ

54、ely capital-intensive approach must be employed in production processes of those goods) since the overall income levels in those countries are much higher than the less-developed countries. In order to meet a great requirement of their consumers many capital-intensive goods have been shipped from ab

55、road.,2020/7/24,The opposite situation could be found in the less-develop countries with a very low income. Consumption bias in those low-income countries would strongly toward inferior goods (They are basically labor intensive) and therefore they do import labor-intensive goods from abroad.,2020/7/

56、24,How to understand Leontiefs paradox?,Factor Intensity Reversal (要素密集度逆轉(zhuǎn)) Demand bias (需求偏好論) Trade barriers (貿(mào)易壁壘論) Natural resources (自然資源論) Heterogeneous labor (勞動力不同質(zhì)論) Human capital (人力資本論),2020/7/24,Trade barriers,William Travis, suggested that the Leontief paradox might be due largely to ta

57、riffs and other forms of protection. There is evidence that, in the United States and some other developed countries labor-intensive industries are relatively heavily protected. Such trade protection must influence trade patterns of those countries. Robert E. Baldwin tried to explain what he discove

58、red by considering specific tariff policy and the other relevant trade policies taken by the United States. The US takes a lot of measures to protect its labor-intensive industries and at the same time discourages its high-tech goods exports by so many means.,See: William. P. Travis, The Theory of T

59、rade and Protection, Cambridge: Harvard University Press, 1964 and Robert E. Baldwin, Determinants of the Commodity Structure of U.S. Trade, American Economic Review 61, no. 1 March 1971.,2020/7/24,Trade barriers (cont.),Such mixture of trade policies must have great impacts on the actual trade pattern of the US. On one hand, protectionist policies, especially the high trade barriers, must inevitably hinder the foreign labor-intensive commodities from entering into the US domestic market. Consequently labor intensity of US imports would be relatively reduced. O