Criticism against hechscher-ohlin type trade theories, International Economics

Assignment Help:

Criticism against Hechscher-Ohlin type trade theories is explained below:

The foremost criticism leveled against Hechscher-Ohlin type trade theories are that they views comparative advantage in the essentially static sense; that is if Pakistan is better at producing cotton and Japan better is at producing, then this situation will always exist. Critics argued that the comparative advantage can and should be viewed in a dynamic (time-varying) sense, and that it was not wise at all to rule out the possibility of Pakistan developing comparative advantage in cars in future.

Of course,  the  policy  advice  of  such  dynamic  comparative advantage theorists  was  very different from the above 6. These people argued that the countries build comparative advantage in the capital-intensive goods by protecting their domestic industries against the cheap industry manufactured imports from abroad. The protection is operationalised through tariffs which mean tax on imports or the outright quota restrictions. The output from the local infant industries then is used to substitute the imports of the manufactures. Various LICs (such as Mexico, India) consistently followed this policy prescription in the mid-20th century, but with the mixed results.

While it is true that number of countries pursued, fully or partly, the policy prescription suggested by the dynamic comparative advantage theories, only some of them were genuinely successful in changing their comparative advantage: Korea developed its comparative advantage in the auto industry, Malaysia in shipbuilding and consumer electronics, Taiwan in microchips, Brazil in light aircraft. Of these, most of the countries (like the East Asian tigers) had the marked export orientation in their industrialization and trade policies. This is what keeps them apart from the failures, which had a much more import-substituting approach to the industrialization..


Related Discussions:- Criticism against hechscher-ohlin type trade theories

Compare and contrast economic regions, Compare and contrast China's newest ...

Compare and contrast China's newest economic regions: the Special Economic Zones (SEZs), Open Cities, and Open Coastal Areas. What is the purpose of each regional type? Show how e

One of the problems in the opportunity cost approach and int, essay should ...

essay should be based on one of the problems mentioned into Haberler (1950) with references to the main assumptions of the general equilibrium analysis

Assignment on International Economics, Can you please sent me Students Assi...

Can you please sent me Students Assignment on Above Title

What is the fisher effect?provide an example, What is the Fisher Effect?  P...

What is the Fisher Effect?  Provide an example. Answer: All moreover equal a rise in a country's expected inflation rate will ultimately cause an equal rise in the interest rat

Explain how a rise in real income affects aggregate demand, Q. Expl...

Q. Explain how a rise in real income affects aggregate demand. Answer: An increase in domestic real income Y leads to a rise in disposable income Yd. This increases

Who are major participants in the foreign exchange market, Q. Who are the ...

Q. Who are the major participants in the foreign exchange market? Answer: 1. Commercial banks 2. Corporations 3. Nonblank financial institutions 4. Central banks

Explain theoretical and methodological aspects , Explain Theoretical and me...

Explain Theoretical and methodological aspects of international economic relations

Calculate the dollar exchange rate, Assume the United States exports 1000 c...

Assume the United States exports 1000 computers at a price of $3000 each and imports 15 UK autos at a price of 10000 pounds each. Assume that the dollar/pound exchange rate is $2 p

Analyze effects of an increase in the european money supply, Q. Analyze the...

Q. Analyze the effects of an increase in the European money supply on the dollar/euro exchange rate. Answer: The major points are: A raise in the European money supply will re

Free trade, how to determine free trade for small country

how to determine free trade for small country

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