Factors That Influence A Nation's Willingness Enter Into Trade Agreements

1714 WordsFeb 16, 20157 Pages
There are many factors that influence a nation’s willingness to enter into Trade Agreements. Briefly outline the basic models discussed in the readings and class (Heckscher-Ohlin and Ricardo-Viner). Discuss what factors influence domestic trade preferences (Political, Economic, Sociotropic, etc.). According to the article, the hypothesis of Heckscher-Ohlin model or factor endowments is that “all factors of production within a country are mobile across sectors, that markets are perfectly competitive, and that there are constant returns to scale in production” (Mansfield & Mutz, 427). Beyond that, another assumption of Heckscher-Ohlin model or factor endowments is critical is that “factors of production can move quickly and easily from one sector to another” (Mansfield & Mutz, 428). In my opinion, one thing can be very easy to see that skill is the most important factor which can gain more benefits from open trade. Briefly, for a country, the more advanced technology you have the more you can get from open trade, for example, America can gain more benefits than China because of “highly skilled individuals will benefit economically from open trade” (Mansfield & Mutz, 451) The second model Ricardo-Viner which is a special factor that is not a unique factor affect open trade, it emphasizes an individual works will affect trade preferences and it posits that “trade preferences depend on the industry in which a person works” (Mansfield & Mutz, 425). This special factor will make

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