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

Manage the translation risk of your multinational enterprise, Question : ...

Question : (a) Differentiate between Transaction, economic risk and Translation risk in foreign exchange market. (use an illustrative and numerical example in each case. (b)

Trade barriers, why do nations impose trade barriers

why do nations impose trade barriers

Net barter terms of trade, what are the limitations of the net barter terms...

what are the limitations of the net barter terms of trade?

International Trade, What constitutes the basis for trade? What are the ga...

What constitutes the basis for trade? What are the gains from trade in terms of production and consumption? Use theories and examples from a country of your choice.

What are predictions for the long run of monetary approach, What are the pr...

What are the predictions for the long run of the Monetary Approach? Answer:     Money supplies- Known the equations

Factors affecting the demand for foreign currency, Q. What are the factors...

Q. What are the factors affecting the demand for foreign currency? Answer: Three factors that affect the demand for foreign currency are risk, expected return, and liquidity.

Gross barter terms of trade, tion..What is the range of gross barter terms ...

tion..What is the range of gross barter terms of trade ?

International economics, "1. Describe the important benefits enjoyed by...

"1. Describe the important benefits enjoyed by Indian companies through TRIPs. Elaborate the main objectives of WTO in global economy. 2. "Leontiff paradox is proved in th

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