《国际贸易》芬斯特拉版人大版练习题答案.pdf

Foreign Offshoring of Goods and Services 1.Consider an offshoring model in which the labor hours of four activities in the United States and Mexico are as follows: Note that labor hours in Mexico are four times those in the United States, refl ecting Mexicos lower productivity. Also note that the ratio of high-skilled to low-skilled labor used in each activity increases as we move to the right, from 1/5 in assembly to 10/1 in R Home expands the set of activities that it does at Home to include incre- mentally higher value activities, whereas the set of high value offshored activities shrinks. c.Draw relative labor supply and demand diagrams for Home and Foreign show- ing the effect of this change. What happens to the relative wage in each coun- try? Answer: An expansion in the set of production activities done at Home (to in- clude higher value ones) increases the average skill intensity of Home produc- tion. This increases the relative demand for high-skilled labor at Home. Simi- larly, because Foreign ceases to do its least skill-intensive activities, the average S-56Solutions Chapter 7 Foreign Offshoring of Goods and Services Component AssemblyProduction Offi ce ServicesR U.S., United States. skill-intensity in Foreign increases and hence the relative demand for high-skilled labor increases. See the following fi gure. 3. Consider a U.S. fi rms production of automobiles, including R as a result, U.S. output increases to Y2so there are gains for the United States. 4. Consider the model of a fi rm that produces fi nal goods using R this can be done by multi- plying the fi rst equation by 4 and subtracting the second equation from it, to get: ?20% ? ? ? ?, for components Minus: 0 ? ? ? ?, for R&D Equals: ?20% ? 0 ? ?, answer It follows that (?WL/ WL) ? ?20% ? (100 / 150) ? ?13.3%, so that the wage for low-skilled labor falls by 13.3% when the price of components falls by 10%. To fi nd the change in the high-skilled wage, we can take this solution, and plug it back into the equation for the change in wages in R&D, to get: 0 ? ? ? 13.3%? ?, so it follows that (?WH/ WH) ? 13.3% ? (10 / 40) ? 3.3%. The wage for high- skilled labor increases by 3.3% when the price of components falls by 10%. c.What has happened to the relative wage of high-skilled/low-skilled labor? Does this match the predictions of the offshoring model in this chapter? Answer: With the wage for high-skilled labor going up, and the wage for low- skilled labor going down, it follows that the relative wage of high-skilled labor (WH/ WL) also rises. Equivalently, the relative wage of low-skilled labor, which is (WL/ WH), falls. This is as predicted by our model in this chapter, where a fall in the relative price of components or a rise in the relative price of R&D bene- fi ts high-skilled labor. 5. Consider the model of a fi rm that produces fi nal goods using R&D and components as inputs, with cost data as follows: Components:Total costs of production ? PC? QC? 100 Earnings of high-skilled labor ? WH? HC? 25 Earnings of low-skilled labor ? WL? LC? 25 Earnings of capital ? R ? KC? 50 Share of total costs paid to high-skilled labor ? 20 / 100 ? 25% Share of total costs paid to low-skilled labor ? 25 / 100 ? 25% R&D:Total costs of R&D ? PR? QR? 100 Earnings of high-skilled labor ? WH? HR? 30 Earnings of low-skilled labor ? WL? LR? 20 Earnings of capital ? R ? KR? 50 Share of total costs paid to high-skilled labor ? 30 / 100 ? 30% Share of total costs paid to low-skilled labor ? 20 / 100 ? 20% ?WH ? WH 40 ? 100 ?WH ? WH 40 ? 100 ?WL ? WL 160 ? 100 ?WL ? WL 10 ? 100 ?WL ? WL 150 ? 100 10 ? 100 40 ? 100 ?WH ? WH S-60Solutions Chapter 7 Foreign Offshoring of Goods and Services a.Which factor(s) is components intensive? Which factor(s) is research intensive? Answer: Component production is intensive in the use of low-skilled labor, be- cause the cost share of low-skilled labor in components (25%) exceeds the cost share of low-skilled labor in R&D (20%). Similarly, R&D is intensive in the use of high-skilled labor, because the cost share of high-skilled labor in R&D (30%) exceeds the cost share of high-skilled labor in components (25%). Notice that capital is used equally in both activities, so it is not intensive in either one. b.Suppose that due to the opening of trade, the relative price of R&D in- creases, ?PR/ PR? 10%, whereas the price of components stays unchanged, ?PC/ PC? 0. Calculate the change in the relative wage of high-skilled and low-skilled labor. Answer: Following the same hint that was given for problem 4, we end up with the following two equations: 0 ? ? ? ?, for components 10% ? ? ? ?, for R&D. Multiplying the components equation by 4 and the R&D equation by 5, and subtracting them, we get: 0 ? ? ? ?, for components Minus: 50% ? ? ? ?, for R&D Equals: ?50% ? ? ? ? 0, answer It follows that (?WH/ WH) ? 50% ? (100 / 50) ? ?100%, so that the wage for high-skilled labor rises by 100% when the price of R&D rises by 10%. To fi nd the change in the low-skilled wage, we can take this solution and plug it back into the equation for the change in wages in components, to get: 0 ? 100%? ? ? ?, so it follows that (?WL/ WL) ? ?100%. The wage for low-skilled labor falls by 100% when the price of R&D rises by 10%. c.What has happened to the relative wage of high-skilled/low-skilled labor? How does this result compare with problem 4, and explain why it is similar or different. Answer: With the wage for high-skilled labor going up, and the wage for low- skilled labor going down, it follows that the relative wage of high-skilled labor (WH/ WL) also rises. Equivalently, the relative wage of low-skilled labor, which is (WL/ WH),falls. The change in the relative wages is the same as what we found in problem 4, because a fall in the relative price of components or a rise in the relative price of R&D has the same effects: to benefi t high-skilled labor. Wage changes found in this problem are larger because the cost shares in the two ac- tivities are more similar than those in problem 4. 25 ? 100 ?WL ? WL 25 ? 100 50 ? 100 ?WH ? WH 100 ? 100 ?WL ? WL 150 ? 100 ?WH ? WH 100 ? 100 ?WL ? WL 100 ? 100 ?WH ? WH 20 ? 100 ?WL ? WL 30 ? 100 ?WH ? WH 25 ? 100 ?WL ? WL 25 ? 100 ?WH ? WH Solutions Chapter 7 Foreign Offshoring of Goods and ServicesS-61 6.The diagram below shows what happened to the relative wage and relative demand for high-skilled labor in the U.S. manufacturing sector during the 1990s. These points are plotted using the data from Figures 7-5 and 7-6. a.What must have happened to the demand and supply curves to explain this change in relative wage and relative employment? Answer: The relative nonproduction wage increased signifi cantly in U.S. man- ufacturing between 1990 and 2001 but the relative employment of nonproduc- tion labor did not change much. This pattern is consistent with an outward shift in relative demand and an inward shift in relative supply for nonproduction workers. As such, relative demand for high-skilled labor has increased (shifted right) and the relative supply of high-skilled labor has decreased (shifted left). See the fi gure on the next page. b.Why do you think the demand and supply curves shifted this way? (Hint:Think about where the workers who leave manufacturing might be going.) Answer: The increase in relative demand is a continuation of what we already saw in the 1980s, due to high-skilled-biased technologic change and offshoring. The reduction in relative supply is new, however. One explanation for this is that high-skilled workers were pulled out of manufacturing and into services (because many high-skill-intensive service sectors have been expanding). S-62Solutions Chapter 7 Foreign Offshoring of Goods and Services 2000 1.80 1.78 1.76 1.74 1.72 1.70 1.68 1.66 1.64 1.62 1.60 0.350.4 Nonproduction/Production Labor Nonproduction/Production Wage 0.450.50.550.6 2001 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 7.Read the article about offshoring by General Motors located online at: /technology/content/feb2006/tc20060202_578175. htm and answer: a.What goods or services are being offshored by GM? Answer: GM is offshoring its information technology (IT) services (this article is not talking about the offshoring of manufacturing). b.What company was named a “tier-one” supplier by GM? What do you already know about this company from Side Bar: Offshoring Microsoft Windows in this chapter? Answer: The Indian company Wipro was named a tier-one supplier to GM. Wipro already manages Microsofts computer resources during Seattles evening hours, as described in a Side Bar in this chapter. c.Why do you think that GM was willing to spend this money on offshoring? Answer: GMs decision may refl ect the decreasing costs to high-tech offshoring (relative to the costs of doing the same functions “in-house”) due to increased international competition from countries such as India. Even though GM is los- ing money right now, it still makes sense to offshore IT services if these can be done cheaper abroad. By doing so, GM will save money and hopefully restore its profi tability. 8.Read the following excerpt, and using what you have learned in this chapter, discuss how offshoring creates opportunities for the countries involved. Source: Excerpted from Steven Pearlstein, “Still Short of the Offshoring Ideal,” The Wash- ington Post, March 12, 2004. Sudhakar Shenoy, chief executive of Information Management Consultants in Reston, makes an ef- fective pitch for “offshoring.” Several years ago IMC saw a market developing for software that would allow biotech companies to make better and faster use of the new human genome research. Doing it here, Shenoy calculated, would Solutions Chapter 7 Foreign Offshoring of Goods and ServicesS-63 2000 1.80 1.78 1.76 1.74 1.72 1.70 1.68 1.66 1.64 1.62 1.60 0.350.4 Nonproduction/Production Labor Nonproduction/Production Wage 0.450.50.550.6 2001 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 Supply, 2001 Supply, 1990 Demand, 2001 Demand, 1990 cost several million dollars, which he fi gured would have priced the product too high for most customers. But by having a small group of engineers at IMCs Indian subsidiary do much of the coding work, he was able to bring the project in at $500,000. The result: IMC now has a thriving line of business in bioinformatics, with major clients and a growing payroll of six-fi gure PhDs here. And there are more engineers than eversix here for every one in India. But thats only part of the good-news story. In Pune, where IMCs Indian operations are located, an airport under construction will require lots of U.S. engineering, design and electronics. At the same time, IMCs Indian engineers, who earned annual salaries of $3,500 a decade ago, now command up to $12,000enough to buy all manner of imported consumer goods. Answer: By offshoring software in India, IMC is able to pass the cost savings to biotech companies researching the human genome. Moreover, the derived de- mand from Indian engineers by successful companies like IMC attributes to higher salaries for the local talents. In addition, the need for reliable infrastruc- ture resulting from a growing economy boosted by companies such as IMC has led to the demand for U.S. engineering, design, and electronics. 9.The quote from the 2004 Economic Report of the President at the beginning of the chapter generated a lot of controversy that year, as discussed at the beginning of sec- tion 3 in the chapter. The chairman of the Council, N. Gregory Mankiw, made the following additional comments in a speech while presenting the report: “Outsourc- ing is just a new way of doing international trade. More things are tradable than were tradable in the past, and thats a good thing.” Those statements quickly led to reactions from both Democratic and Republican members of Congress. Tom Daschle, a Democrat and the Senate minority leader, said, “If this is the administrations position, they owe an apology to every worker in America.” Dennis Hastert, a Republican and speaker of the House, said, “Outsourc- ing can be a problem for American workers and the American economy.” John Kerry, the Democratic presidential candidate, referred to businesses that offshored as “. . . Benedict Arnold corporations.” In response, Mankiw clarifi ed his earlier com- ments: “My lack of clarity left the wrong impression that I praised the loss of U.S. jobs.” Although you might believe that these statements are just a squabble between politicians trying to score points during the presidential campaign, it is still worth try- ing to sort out who gains and who loses from offshoring. a.Why does Mankiw say that “outsourcing is . . . a good thing”? Who is it good for in the United States? Are there overall gains for the United States? Explain with a diagram. Answer: Mankiw says that offshoring is “a good thing” because there are over- all gains from the trade of production activities relative to autarky. As seen in Figure 7-10, both countries benefi t by specializing in certain production activi- ties and offshoring others. Trade in production activities allows for higher levels of output employing the same amount of domestic inputs. However, within each country these gains may not be spread evenly across workers of different skill lev- els, as changes in the number of tasks offshored lead to changes in the relative wage of high-skilled workers. b.Later in this chapter, Paul Samuelson is quoted as saying that there is no “neces- sary surplus of winning over losings” due to offshoring. Use Figure 7-12 to care- fully explain why Samuelson says this. Answer: Samuelson points out that loss due to offshoring may occur as a result of the deterioration in a countrys terms of trade. That is, from one offshoring equilibrium to another there are not necessarily gains since an increase in the rel- ative price of a production activity hurts the importer of that activity. Of note, S-64Solutions Chapter 7 Foreign Offshoring of Goods and Services though, gains from offshoring are always greater than the situation with no- trade. 10.In Figure 7-11, we saw that a fall in the relative price of components leads to an in- crease in the amount of components imported, but that the amount of R&D ex- ported from Home does not necessarily increase. To explore this further, complete the following: a.Let the relative price of components continue to fall in Figure 7-11, and show in a graph what happens to the equilibrium point on the isoquant for the fi nal good. Answer: As the relative price of components continues to fall, the use of com- ponents in the fi nal good increases. Imports of components increase as the equi- librium production point moves out to the fl atter portion of the fi nal good iso- quant, and the level of fi nal good output increases (but at a diminishing rate due to diminishing returns in production). See the following fi gure. b.Now draw another graph that has the relative price of components on the ver- tical axis and the imports of components on the horizontal axis. Start at the no- trade relative price of components, where imports are zero. Then label the var- ious world-relative prices of components on the vertical axis, and graph the quantity of imports at each price. Can we be sure that the import demand curve slopes downwards? Answer: As the relative price of components decreases from the Home autarky level, Home components imports as well as the fi nal goods produced increase. As long as incremental components are still useful in fi nal good production, com- ponents imports will increase as their relative price decreases, which is guaran- teed by the shape of the isoquants. See the following fi gure. Solutions Chapter 7 Foreign Offshoring of Goods and ServicesS-65 Components Slope = (PC / PR)A Slope = (PC / PR)W1 Slope = (PC / PR)W2 C C? B? A Y1 Y2 Y0 B R&D c.Now draw a new graph that has the relative price of R&D on the vertical axis and the exports of R&D on the horizontal axis. Start at the no-trade rela- tive price of R&D, where exports are zero. Then label the various world-relative prices of R&D on the vertical axis, and graph the quantity of exports at each price. When the relative price of R&D is high enough, what do you no- tice about the export supply curve? Answer: See the following fi gure: As the relative price of R&D increases from its autarky level, Home specializes further in R&D services and exports increase. However, for a suffi ciently high relative price, import demand in the rest of the world diminishes as countries abroad substitute components for R&D in fi nal good production. As a result, as Home approaches full specialization in R&D, exports of that activity approach zero. S-66Solutions Chapter 7 Foreign Offshoring of Goods and Services Home Components Imports (PC / PR) A PC / PR (PC / PR)W1 (PC / PR)W2 Home R&D Exports (PR / PC)A PR / PC (PR / PC)W1 (PR / PC)W2 11.Why might it be relatively easier for an undeveloped country like India to export ser- vice activities through offshoring than to participate in the global economy by pro- ducing manufacturing components? Answer: Because offshoring of manufactures involves the trade of intermediate in- puts across several borders, there is an extra cost associated with transporting the goods. Therefore, a country must have good infrastructures such as developed road- ways to participate in the global economy. In India, for example, communications technology developed rapidly whereas transportation developed more slowly,