a) The Ricardian Model vs. the Heckscher-Ohlin Trade Model.

Explain in your own words (50 words maximum) each concept below:

b) Shallow vs. Deep Integration

c) The OLI Theory

Solutions

Expert Solution

1. The Ricardian model vs. Heckscher-Ohlin.
Ricardian model focus on only one factor of production which is labor. It only uses workforce productivity to explain differences in international trade. whereas Heckscher-Ohlin assumes that there are two factors of production named labor & capital. One country is more or less developed then other because of the difference in these two factors.

2. Shallow vs. deep integration

shallow integration means reduction or elimination of tariffs,quotas and other barriers to trade in goods at the border.

whereas deep integration refers to trade agreement which not only contains rules on tariffs and restriction,but which also regulate the business environment in a moral general sense.

3. The OLI theory

It is published by John Dunning in 1979.The OLI stands for(Ownership,location,intenalization).This theory states that transactions are made within an istitution if the transaction costs on the free market are higher than the internal costs.It mainly focus how a firm maximize its investment in a foriegn market.

Hope this will help you.If it really does then please give a thumbs up

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

3. The Ricardian Model vs. the Heckscher-Ohlin Trade Model.Discuss the difference between both models, including...

3. The Ricardian Model vs. the Heckscher-Ohlin Trade Model. Discuss the difference between both models, including the PPC (you should be able to draw out the difference for the exam), the income distribution effects of trade.4. According to the following table, which country is relatively more labor-abundant? Explain your answer. Which is relatively more capital-abundant?United States CanadaCapital 40 machines 10machinesLabor 200 workers 60 workers5. Suppose that the United States and Canada have the factor endowments given in the table inQuestion...

Heckscher-Ohlin Model Theory of International Trade

Skill premium in the Heckscher-Ohlin Model Suppose that we are within Heckscher-Ohlin model with perfect competition....

Skill premium in the Heckscher-Ohlin Model Suppose that we are within Heckscher-Ohlin model with perfect competition. There are two goods (computers and shoes), and two factors of production: Skilled labor (H) and unskilled labor (L). The country has 10 skilled workers and 20 unskilled workers. Each factor is mobile across industries. The production function in the computer industry is given by: YC = LC1/3 HC2/3. The production function in the shoe industry is given by: YS = LS2/3 HS1/3. Denote...

This problem uses the Heckscher-Ohlin model to predict the direction of trade. Consider the production of...

This problem uses the Heckscher-Ohlin model to predict the direction of trade. Consider the production of handmade rugs and assembly line robots in Canada and India. a. Which country would you expect to be relatively labor-abundant, and which is capital-abundant? Why? b. Which industry would you expect to be relatively labor-intensive, and which is capital-intensive? Why? c. Given your answers to (a) and (b), draw production possibilities frontiers for each country. Assuming that consumer preferences are the same in both...

The Heckscher-Ohlin model is often used to understand the long-term effects of international trade on the...

The Heckscher-Ohlin model is often used to understand the long-term effects of international trade on the income distribution. Imagine a simple economy where there are only carpenters and electricians working. They produce two goods: furniture and lamps. Both types of workers are needed in the production of both goods but the furniture industry uses carpenters intensively and the lamp industry uses electricians intensively. There are two countries: the Lowlands and the Highlands. In the Lowlands there are many more carpenters...

Explain the South Korean international trade by one or two trade theories (example: Heckscher-Ohlin model difference...

Explain the South Korean international trade by one or two trade theories (example: Heckscher-Ohlin model difference in resources, gravity model difference in economic scale and distance)

Q1: Despite that international trade in factors of production was restricted according to Heckscher-Ohlin Model, international...

Q1: Despite that international trade in factors of production was restricted according to Heckscher-Ohlin Model, international trade leads to a complete equalization in prices of homogenous factors of production, explain. Q2: The increase in official reserves of the country is recorded in the Balance of Payments in the debit side of the Official Reserve Transactions account, comment. Q3: In the free floating exchange rate system, the black market for foreign currencies disappears. Discuss the validity of this phrase, explaining the...

Please compare and contrast the Ricardian Law of Comparative Advantage with the modern theory (Heckscher-Ohlin) of...

Please compare and contrast the Ricardian Law of Comparative Advantage with the modern theory (Heckscher-Ohlin) of international trade.

. Heckscher-Ohlin Model A. Assumptions of the model B. Factor abundance and the shape of the...

. Heckscher-Ohlin Model A. Assumptions of the model B. Factor abundance and the shape of the PPF C. Factor abundance and the pattern of trade D. Graphical representation of effect of trade on Production and consumption E. Effect of trade on labor demand and factor prices F. The Leontieff paradox

Explain why the Heckscher-Ohlin model is consistent with lowskilled workers wanting more trade barriers, while...

Explain why the Heckscher-Ohlin model is consistent with low skilled workers wanting more trade barriers, while higher-skilled workers (where they are employed in industries more exposed to trade) are against.

Subjects