Explanations that supports ho-theorem consistency

Reference no: EM131043959

Project - Comparative Advantage

Instructions 1-

Go to https://www.intracen.org/itc/market-info-tools/statistics-export-product-country/ . Select at least 1 product from each pod below for a total of at least 6 products for your analysis.

To select a product, click on the product number or the "+" button sign next to each respective product number.

Select your first item. Then go to instructions 2.

Pod 1

Fish (03) select 03

Diary produce (04) select 04

Edible vegetables (07) select 07

Edible fruits (08) select 08

Pod 2

Coffee, tea, mate, and spices (09) select 09

Corn (10) select 1001, 1005, 1006, or any other sub-product of your choice

Oil seeds (12) select 1201

Sugar (17) select 17

Cocoa (18) select 18

Pod 3

Beverages, spirits, and vinegar (22) select 2203, 2205, 2207, 2208, or any other sub-product of your choice

Ores, slag, and ash (26) select 2601, 2603, 2606, 2616, or any other sub-product of your choice

Fertilizers (31) select 31

Essential oils (33) select 3303 or 3307

Plastics (39) select 39

Cotton (52) select 52

Pod 4

Carpets (57) select 57

Special woven fabrics (58) select 58

Knitted and woven fabrics (60) select 60

Articles of apparel (61) select 61

Articles of apparel (62) select 62

Glass and hardware (70) select 70

Pod 5

Iron and steel (72) select 72

Copper (74) select 74

Nickel (75) select 75

Aluminum (76) select 76

Pod 6

Vehicles (87) select 8703, 8701, 8710, 8712, or any other sub-product of your choice

Aircraft (88) select 88

Optical, photographic (90) select 9006, 9909, 9012, 9018, or any other sub-product of your choice

Arms (93) select 93

Toys (95) select 95

Instructions 2-

selecting a product, a new webpage opens. Look at the top of this page. Notice the 2^nd row with World Country. On the 4^th row, select "Exports" from other criteria. Be sure that other information on the 4th row from the top of this webpage looks like the following:

"Yearly time series" "by country" "Values" "US Dollar"

Instructions 3-

Next, click on the MS Excel icon on the left-hand side to download information. Click "yes" to accept spreadsheet.

Highlight and copy data, then open a new MS Excel spreadsheet, and paste data (Paste as "values" under the "Paste Options").

Save this file as "Product1-Exports" (or whatever name you wish to use).

Instructions 4-

Now go back to the webpage you just downloaded data from.

Under "other criteria", select "Imports". Be sure that other information on the 4th row from the top of this webpage looks like the following:

"Yearly time series" "by country" "Values" "US Dollar"

Click on the MS Excel icon on the left-hand side to download information. Click "yes" to accept spreadsheet. Highlight and copy data, go to "Product1-Exports" file, click at the bottom of spreadsheet to open a new sub- spreadsheet, and paste data (Paste as "values" under the "Paste Options").

Name "Sheet1", at the bottom of spreadsheet, as "exports" and "Sheet 2" as "imports".

Re-save file.

Instructions 5-

Repeat Instructions2-4 until you have 6 different products.

Instructions 6-

Choose a non-USA country from each of the 6 product files for your analysis. You will be analyzing 6 products of, for example, Argentina.

Select any year between 2011 through 2014.

Within each product file, create a column called "RCA". RCA stands for Revealed Comparative Advantage. Under the "RCA" column, write the following formula: (exports-imports)/(exports+imports). Use this formula to generate the comparative advantage value for your country.

You will create RCA for each of your 6 product files for your country.

Instructions 7-

Create a new MS Excel spreadsheet that looks like page 76 of your textbook. You will be using your 6 products file w/ RCAs to generate a spreadsheet like on page 76 for your country.

In creating a spreadsheet that looks like page 76, think about if your country is generally thought of as a land- abundant (or land-scarce), labor abundant (or labor scarce), and/or capital abundant (or capital scarce). Presumably, the U.S. is capital-abundant and should have a comparative advantage in pharmaceuticals and labor-scarce and have comparative disadvantage in some labor-related products. From page 76 (surprisingly), the U.S. does not have the comparative advantage in pharmaceuticals! It imports more drugs than it exports; thus, U.S. pharmaceuticals seems inconsistent with HO-Theorem!

Paper-

1. Are your findings, as replicated using page 76, consistent and/or inconsistent with the HO-Theorem?

2. Can you come up with explanations that supports HO-Theorem consistency? Alternative explanations for HO-Theorem inconsistency? Read page 80-81 for further thoughts and reflections.

3. Write a 5-page paper on your project. When complete, upload your paper and MS Excel spreadsheet to Blackboard.

Attachment:- Assignment.rar

Reference no: EM131043959

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