Why may the stolper-samuelson theory be wrong

Reference no: EM133706486

Question: In many cases, the Stolper-Samuelson theory does not hold in the real world. In other words, more free trade does not always seem to hurt a certain group in the long-run. Read the following blog post by Harvard economist Dani Rodrik: LinkLinks to an external site.. Parts of it are technical, but after reading it, provide your opinion on the following: why may the Stolper-Samuelson theory be wrong about at least one group being worse off from trade? One hint is that it has something to do with what's called Total Factor Productivity (TFP). TFP is basically how much output a country can produce with its resources (labor, land, etc.). The Heckscher-Ohlin and Stolper-Samuelson theories assume that having more free trade does not affect TFP.

Reference no: EM133706486

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