CH02 Labor productivity comparative advantage the Ricardian model(国际经济学-厦门大学 陈涛)

CHAPTER2,LABORPRODUCTIVITYCOMPARATIVEADVANTAGETHERICARDIANMODEL,Copyright2003PearsonEducation,Inc.,Slide1-2,ChapterOrganization,IntroductionTheConceptofComparativeAdvantageAOne-FactorEconomyTradeinaOne-FactorWorldComparativeAdvantagewithManyGoodsAddingTransportCostsandNontradedGoodsSummary,Copyright2003PearsonEducation,Inc.,Slide1-3,Countriesengageininternationaltradefortwobasicreasons:Theyaredifferentfromeachotherintermsofclimate,land,capital,labor,andtechnology.Theytrytoachievescaleeconomiesinproduction.TheRicardianmodelisbasedontechnologicaldifferencesacrosscountries.Thesetechnologicaldifferencesarereflectedindifferencesintheproductivityoflabor.,Introduction,Copyright2003PearsonEducation,Inc.,Slide1-4,OnValentinesDaytheU.S.demandforrosesisabout10millionroses.GrowingrosesintheU.S.inthewinterisdifficult.Heatedgreenhousesshouldbeused.Thecostsforenergy,capital,andlaboraresubstantial.Resourcesfortheproductionofrosescouldbeusedtoproduceothergoods,saycomputers.,TheConceptofComparativeAdvantage,Copyright2003PearsonEducation,Inc.,Slide1-5,OpportunityCostTheopportunitycostofrosesintermsofcomputersisthenumberofcomputersthatcouldbeproducedwiththesameresourcesasagivennumberofroses.ComparativeAdvantageAcountryhasacomparativeadvantageinproducingagoodsiftheopportunitycostofproducingthatgoodsintermsofothergoodsislowerinthatcountrythanitisinothercountries.,TheConceptofComparativeAdvantage,Copyright2003PearsonEducation,Inc.,Slide1-6,SupposethatintheU.S.10millionrosescanbeproducedwiththesameresourcesas100,000computers.SupposealsothatinSouthAmerica10millionrosescanbeproducedwiththesameresourcesas30,000computers.ThisexampleassumesthatSouthAmericanworkersarelessproductivethanU.S.workers.,TheConceptofComparativeAdvantage,Copyright2003PearsonEducation,Inc.,Slide1-7,Ifeachcountryspecializesintheproductionofthegoodswithloweropportunitycosts,tradecanbebeneficialforbothcountries.RoseshaveloweropportunitycostsinSouthAmerica.ComputershaveloweropportunitycostsintheU.S.Thebenefitsfromtradecanbeseenbyconsideringthechangesinproductionofrosesandcomputersinbothcountries.,TheConceptofComparativeAdvantage,Copyright2003PearsonEducation,Inc.,Slide1-8,Table2-1:HypotheticalChangesinProduction,TheConceptofComparativeAdvantage,Copyright2003PearsonEducation,Inc.,Slide1-9,TheexampleinTable2-1illustratestheprincipleofcomparativeadvantage:Ifeachcountryexportsthegoodsinwhichithascomparativeadvantage(loweropportunitycosts),thenallcountriescaninprinciplegainfromtrade.Whatdeterminescomparativeadvantage?Answeringthisquestionwouldhelpusunderstandhowcountrydifferencesdeterminethepatternoftrade(whichgoodsacountryexports).,TheConceptofComparativeAdvantage,Copyright2003PearsonEducation,Inc.,Slide1-10,AOne-FactorEconomy,Assumethatwearedealingwithaneconomy(whichwecallHome).Inthiseconomy:Laboristheonlyfactorofproduction.Onlytwogoods(saywineandcheese)areproduced.Thesupplyoflaborisfixedineachcountry.Theproductivityoflaborineachgoodsisfixed.Perfectcompetitionprevailsinallmarkets.,Copyright2003PearsonEducation,Inc.,Slide1-11,ThetechnologyofHomeseconomycanbesummarizedbylaborproductivityineachindustry,expressedintermsofunitlaborrequirements:Theunitlaborrequirementisthenumberofhoursoflaborrequiredtoproduceoneunitofoutput.DenotewithaLWtheunitlaborrequirementforwine(e.g.ifaLW=2,thenoneneeds2hoursoflabortoproduceonegallonofwine).DenotewithaLCtheunitlaborrequirementforcheese(e.g.ifaLC=1,thenoneneeds1houroflabortoproduceapoundofcheese).TheeconomystotalresourcesaredefinedasL,thetotallaborsupply(e.g.ifL=120,thenthiseconomyisendowedwith120hoursoflaboror120workers).,AOne-FactorEconomy,Copyright2003PearsonEducation,Inc.,Slide1-12,ProductionPossibilitiesTheproductionpossibilityfrontier(PPF)ofaneconomyshowsthemaximumamountofagoods(saywine)thatcanbeproducedforanygivenamountofanother(saycheese),andviceversa.Orillustratesthedifferentmixesofgoodstheeconomycanproduce.ThePPFofoureconomyisgivenbythefollowingequation:aLCQC+aLWQW=L(2-1)Fromourpreviousexample,weget:QC+2QW=120,AOne-FactorEconomy,Copyright2003PearsonEducation,Inc.,Slide1-13,L/aLW,L/aLC,Figure2-1:HomesProductionPossibilityFrontier,AOne-FactorEconomy,o,Copyright2003PearsonEducation,Inc.,Slide1-14,RelativePricesandSupplyTheparticularamountsofeachgoodsproducedaredeterminedbyprices.TherelativepriceofgoodsX(cheese)intermsofgoodsY(wine)istheamountofgoodsY(wine)thatcanbeexchangedforoneunitofgoodsX(cheese).Examplesofrelativeprices:IfapriceofacanofCokeis$0.5,thentherelativepriceofCokeistheamountof$thatcanbeexchangedforoneunitofCoke,whichis0.5.Therelativepriceofa$intermsofCokeis2cansofCokeperdollar.,AOne-FactorEconomy,Copyright2003PearsonEducation,Inc.,Slide1-15,DenotewithPCthedollarpriceofcheeseandwithPWthedollarpriceofwine.DenotewithwWthedollarwageinthewineindustryandwithwCthedollarwageinthecheeseindustry.Therearenoprofitsinourone-factormodel,thehourlywagerateinthecheesesectorwillequalthevalueofwhataworkercanproduceinanhour,PC/aLC.ThehourlywagerateinthewinesectorwillbePW/aLW.,AOne-FactorEconomy,Copyright2003PearsonEducation,Inc.,Slide1-16,Theaboverelationsimplythatiftherelativepriceofcheese(PC/PW)exceedsitsopportunitycost(aLC/aLW),thentheeconomywillspecializeintheproductionofcheese.OrPC/aLCPW/aLW.Intheabsenceoftrade,bothgoodsareproduced,andthereforePC/PW=aLC/aLW.,AOne-FactorEconomy,Copyright2003PearsonEducation,Inc.,Slide1-17,TradeinaOne-FactorWorld,Assumptionsofthemodel:Therearetwocountriesintheworld(HomeandForeign).Eachofthetwocountriesproducestwogoods(saywineandcheese).Laboristheonlyfactorofproduction.Thesupplyoflaborisfixedineachcountry.Theproductivityoflaborineachgoodsisfixed.Laborisnotmobileacrossthetwocountries.Perfectcompetitionprevailsinallmarkets.AllvariableswithanasteriskrefertotheForeigncountry.,Copyright2003PearsonEducation,Inc.,Slide1-18,AbsoluteAdvantageAcountryhasanabsoluteadvantageinaproductionofagoodsifithasalowerunitlaborrequirementthantheforeigncountryinthisgoods.AssumethataLCa*LCandaLWa*LWThisassumptionimpliesthatHomehasanabsoluteadvantageintheproductionofbothgoods.AnotherwaytoseethisistonoticethatHomeismoreproductiveintheproductionofbothgoodsthanForeign.EvenifHomehasanabsoluteadvantageinbothgoods,beneficialtradeispossible.Thepatternoftradewillbedeterminedbytheconceptofcomparativeadvantage.,TradeinaOne-FactorWorld,Copyright2003PearsonEducation,Inc.,Slide1-19,ComparativeAdvantageAssumethataLC/aLWa*LC/a*LW(2-2)ThisassumptionimpliesthattheopportunitycostofcheeseintermsofwineislowerinHomethanitisinForeign.Inotherwords,intheabsenceoftrade,therelativepriceofcheeseatHomeislowerthantherelativepriceofcheeseatForeign.HomehasacomparativeadvantageincheeseandwillexportittoForeigninexchangeforwine.,TradeinaOne-FactorWorld,Copyright2003PearsonEducation,Inc.,Slide1-20,L*/a*LW,L*/a*LC,+1,Figure2-2:ForeignsProductionPossibilityFrontier,TradeinaOne-FactorWorld,Copyright2003PearsonEducation,Inc.,Slide1-21,DeterminingtheRelativePriceAfterTradeWhatdeterminestherelativeprice(e.g.,PC/PW)aftertrade?Toanswerthisquestionwehavetodefinetherelativesupplyandrelativedemandforcheeseintheworldasawhole.Therelativesupplyofcheeseequalsthetotalquantityofcheesesuppliedbybothcountriesateachgivenrelativepricedividedbythetotalquantityofwinesupplied,(QC+Q*C)/(QW+Q*W).Therelativedemandofcheeseintheworldisasimilarconcept.,TradeinaOne-FactorWorld,Copyright2003PearsonEducation,Inc.,Slide1-22,2,1,aLC/aLW,a*LC/a*LW,Figure2-3:WorldRelativeSupplyandDemand,TradeinaOne-FactorWorld,Copyright2003PearsonEducation,Inc.,Slide1-23,TradeinaOne-FactorWorld,First,theRScurveshowsthatthereisnosupplyofcheeseiftheworldpricedropsbelowaLC/aLW.-AssumeaLC/aLWa*LC/a*LW,Homewillspecializeintheproductionofcheese.-HomewillspecializeintheproductionofwinewheneverPC/PWaLC/aLW,orPC/aLCPW/aLW.-Similarly,ForeignwillspecializeinwineproductionwheneverPC/PWa*LC/a*LW,bothHomeandForeignwillspecializeincheeseproduction.Therewillbenowineproduction,sothattherelativesupplyofcheesewillbecomeinfinite.Fourth,AtPC/PW=a*LC/a*LW,Foreignworkersareindifferentbetweenproducingcheeseandwine.Weagainhaveaflatsectionofthesupplycurve.Fifth,aLC/aLWPC/PWa*LC/a*LW,therelativesupplyofcheeseis(L/aLC)/(L*/a*LW).,Copyright2003PearsonEducation,Inc.,Slide1-25,TheGainsfromTradeIfcountriesspecializeaccordingtotheircomparativeadvantage,theyallgainfromthisspecializationandtrade.Wewilldemonstratethesegainsfromtradeintwoways.First,wecanthinkoftradeasanewwayofproducinggoodsandservices(thatis,anewtechnology).,TradeinaOne-FactorWorld,Copyright2003PearsonEducation,Inc.,Slide1-26,Anotherwaytoseethegainsfromtradeistoconsiderhowtradeaffectstheconsumptionineachofthetwocountries.Theconsumptionpossibilityfrontierstatesthemaximumamountofconsumptionofagoodsacountrycanobtainforanygivenamountoftheothercommodity.Intheabsenceoftrade,theconsumptionpossibilitycurveisthesameastheproductionpossibilitycurve.Tradeenlargestheconsumptionpossibilityforeachofthetwocountries.,TradeinaOne-FactorWorld,Copyright2003PearsonEducation,Inc.,Slide1-27,TradeinaOne-FactorWorld,Figure2-4:TradeExpandsConsumptionPossibilities,(a)Home,(b)Foreign,Copyright2003PearsonEducation,Inc.,Slide1-28,SettingUptheModelBothcountriesconsumeandareabletoproducealargenumber,N,ofdifferentgoods.RelativeWagesandSpecializationThepatternoftradewilldependontheratioofHometoForeignwages.Goodswillalwaysbeproducedwhereitischeapesttomakethem.Forexample,itwillbecheapertoproducegoodsiinHomeifwaLiw/w*.,ComparativeAdvantagewithManyGoods,Copyright2003PearsonEducation,Inc.,Slide1-29,ComparativeAdvantagewithManyGoods,Table2-4:HomeandForeignUnitLaborRequirements,Copyright2003PearsonEducation,Inc.,Slide1-30,Whichcountryproduceswhichgoods?Acountryhasacostadvantageinanygoodforwhichitsrelativeproductivityishigherthanitsrelativewage.If,forexample,w/w*=3,Homewillproduceapples,bananas,andcaviar,whileForeignwillproduceonlydatesandenchiladas.Bothcountrieswillgainfromthisspecialization.,ComparativeAdvantagewithManyGoods,Copyright2003PearsonEducation,Inc.,Slide1-31,DeterminingtheRelativeWageintheMultigoodModelTodeterminerelativewagesinamultigoodeconomywemustlookbehindtherelativedemandforgoods(i.e.,therelativederiveddemand).TherelativedemandforHomelabordependsnegativelyontheratioofHometoForeignwages.,ComparativeAdvantagewithManyGoods,Copyright2003PearsonEducation,Inc.,Slide1-32,ComparativeAdvantagewithManyGoods,Figure2-5:DeterminationofRelativeWages,Copyright2003PearsonEducation,Inc.,Slide1-33,AddingTransportCostsandNontradedGoods,Therearethreemainreasonswhyspecializationintherealinternationaleconomyisnotextreme:Theexistenceofmorethanonefactorofproduction.Countriessometimesprotectindustriesfromforeigncompetition.Itiscostlytotransportgoodsandservices.Theresultofintroducingtransportcostsmakessomegoodsnontraded.Insomecasest