国外高校国际贸易笔记.doc

Chapter 2 Classical Theory of International TradeTopics Dealt With:1. Gains from Trade Who benefits from trade Where do the gains come from How are the gains allocated among trading countries2. Direction of trade which goods does a country export or import what determines the direction of trade3. What are the terms of trade how much of the export good trades for the import goodClassical vs the Mercantilists:Mercantilists: Thomas Mun (1664) Keep X Z = Au inflow = more wealth. Thus, the govtshould use tariffs and quotas to restrict imports. -trade is a zero-sum game Classical view:David Hume (1752, Scottish philosopher) pricespecieflow mechanism: X Au outflow = Ms drops = P drops = X rises and Z drops until the X Z is again zeroThus, the money market is selfregulating = no govt interference in trade.Adam Smith Absolute Advantage 1776 wrote The Wealth of Nations laissez faire-invisible hand-self-interest hypothesis*laissez faire markets perform efficiently and maximize social welfareDavid Ricardo (1817) and Robert Torrens (1808) Ricardian Theory of Comparative Advantage - trade is mutually beneficial- labor theory of value 2-5Gottfried Haberler (1933), James Meade (1952), Wassily W. Leontief (1933), Francis Edgeworth (1881 derived the contract curve), Alfred Marshall (1879), and J. Stuart Mill (1860s) Trade based on Opportunity Costs (PPC analysis) and offer curve analysis.Eli Heckscher (1919), Bertil Ohlin (1933), Paul Samuelson (1941, 1948), and Wolfgang Stolper (1941) The HeckscherOhlin-Samuelson Theory of Trade.Classical Theory concentrates on real factors only money is neutral classical dichotomy- Says law (given prices are flexible) = tendency to be at full employment- long runTrade based on Absolute Advantage: Adam SmithAbsolute Advantage A country can produce a given commodity more efficiently than another country. = 1. a laborer can produce a larger amount of output in a specified time period (higher Q/L)2. a country can produce a product at an absolutely lower cost per unit of output (lower AC) determines the direction of trade = export the goods a country has an absolute adv. in and import of the goods of the absolute disadv. Specialization once trade takes place, countries will reallocate resources to their more productive industries = world output will increase. trade = welfare of world autarky caselaissez faire = world welfare will be maximizedExample: Q/L L/QProduct Output per person hour Unit labor requirementsHomeForeignHomeForeignW 6 1 1/6 = aLW 1/1 = bLWC45 1/4 = aLC 1/5 = bLCThe home country has the abs. advantage in commodity WThe foreign country has the abs. advantage in commodity CTrade is beneficial because W is cheaper in the home country and C is cheaper in the foreign country.Move 1 laborer from C to W in the home country and 1 laborer for W to C inthe foreign country = W will increase by 5 (+6 home, 1 foreign) and C will increase by 1 (4 home, +5 foreign) Assumes CRS and L is the only input.= world gains from trade, gain is due to the tendency towards specialization. The gain for the individual countries depends on the WTOT.rule: DTOTa WTOT WTOT .2 WTOT is in terms of W Why?if WTOT = 1.5 = the foreign country receives all the gains from trade WTOT = .2 = the home country receives all the gains from trade 1.5 WTOT .2 = the countries share the gains from tradeSuppose the WTOT = 1 and the home country exports 15 W for 15 C the home country gains 15C 10C (if trade at DTOT) = 5C or saves 1.25 hrs. the foreign country gains 15W 3W (if trade at DTOT) = 12W (12 hrs. saved)Problem:Developed countries have an absolute advantage in almost every product over developing countries and yet trade takes place. Why?Assumptions underlying the basic Ricardian Model:1. 2 countries home and foreign2. 2 goods W and C3. one factor of production labor labor theory of value (prices of commodities are determined by their labor content) or we can claim that inputs are used in a given proportion for all commodities produced. ex. (K/L)W = (K/L)C = constant4. labor is homogeneous, immobile between countries, and completely mobile within a given country = labor receives same wage rate within a given country no matter what industry they are in.5. differences in labor productivity are due to climatic conditions, quantity and fertility of land, capital, etc.6. P.C. = perfect info, profits are zero in long run.7. production is homogeneous degree 1 = CRS Q = f(K,L) tmQ = f(tK,tL) = f is homogeneous degree m8. No transportation costs.9. No mkt. impediments.Comparative Advantage refers to the productivity advantage possessed by an industry, within a given country, over other different industries within that same country.Law of Comparative Advantage Export the good you have a comp. advantage in. Import the good you have a comp. disadv. in. A Numerical Example:Q/L are the numbers in the table.Home ForeignW32C61 Note: home is 6 times more productive than foreign in prod of C home is 1.5 times more productive than foreign in prod of W= home has comparative advantage in the production of Cforeign is 1/6 as productive as home in the prod of Cforeign is 2/3 as productive as home in the prod of W= foreign has a comparative advantage in the production of WRule:The world will be better off if each country exports the good they have the comparative advantage in.Heuristic proof that the WTOT will lie between the two countries DTOT.DTOTh = .5 in terms of W = willing to trade 1C for .5W = 1C*Pc = .5W*Pw = .5 = Pc/Pw = relative price of CDTOTf = 2 in terms of W = 2 = relative price of C in the foreign countrynote:that C is relatively cheaper in the home country (which has the comparative advantage in C)When trade takes place C is exported to foreign and W is exported to home= Pc in home rises and the Pw in home to fall = (Pc/Pw)h will risePc in foreign drops and Pw in foreign rises = (Pc/Pw)f will dropTherefore, DTOTh = (Pc/Pw)h = .5 WTOT each laborer in the home country will receive 1 unit of C per hour of work and each laborer in the foreign country will receive 1/3 of a W unit per hour of work.If WTOT = 1 = Pc/Pw = 1W trades for 1C = Home receives 3 times the wages of the foreign country.The ratio of the wages lies somewhere between the ratio of the two countriesproductivities6 wage ratio 1.5 , if true, the home country will be the lowcost producer of C and the foreign country will be the low cost producer of W.Varying the WTOT between 2 and .5 gives the 6 to 1.5 range for the wage ratio.Note that home has the cost advantage in C, even though it pays its workersup to but not including 6 times as