Source of comparative advantage, International Economics

Assignment Help:

 

The Source of Comparative Advantage can be understood as follows:

The source of comparative advantage could be productivity differential (Ricardo) or differences in the factor endowments (Hechshcer-Ohlin). In the latter case, given the two countries (one rich in labor and one rich in capital, and a labor-intensive good and a capital intensive good, the labour abundant country will have comparative advantage in production of the labour-intensive good while on the other hand the capital abundant country will have comparative advantage in the capital-intensive good.

The natural policy prescription emanating from above argument was that the LICs which are often abundant in labor should produce primary products while rich countries alone must produce capital-intensive goods.

 

 


Related Discussions:- Source of comparative advantage

Effects of increase in real national income on interest rate, What will be ...

What will be the effects of an increase in real national income on the interest rate? Answer: An enhance in real national income will increase the interest rate.  If investment

International trede, explain the newo clacical theory of international tred...

explain the newo clacical theory of international trede

Explain the fundamental equation of the monetary approach, Present and expl...

Present and explain the Fundamental Equation of the Monetary Approach. Answer:  Suppose E $ /E = P US /P E and that domestic price levels depend on domestic money demands and

Change in money supply creates immediate demand and cost, "Although the pri...

"Although the price levels appear to display short-run stickiness in many countries, a change in the money supply creates immediate demand and cost pressures that eventually lead t

Why countries do are indulged in trade?, Countries are indulged in trade be...

Countries are indulged in trade because there are mutual gains from trade. But then, what are these gains which they obtain, and how are these realized? Comparative advantage theor

International economics: Theory & policy, In a day of production, firms in ...

In a day of production, firms in angola can produce 200 liters of oil or 10 kilograms of tungsten. Firms in Namibia can produce 160 liters of oil or 60 kilograms of tungsten. Which

Protectionism, what are the theories supporting protectionism

what are the theories supporting protectionism

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