EBK INTERNATIONAL ECONOMICS
7th Edition
ISBN: 9780134523866
Author: Gerber
Publisher: YUZU
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Chapter 4, Problem 10SQ
To determine
Explain the trade pattern of Spain and its
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Students have asked these similar questions
"Poor countries like Malawi have no absolute advantages. They have poor soil, low investments in formal education and hence low-skill workers, no capital, and no natural resources to speak of. Because they have no advantage, they cannot benefit from trade."
How would I respond to this statement?
Proponents of free trade, primarily developed country economists, argue that the liberalization of trading relationships between rich and poor countries(the removal of tariff and nontariff barriers) would work toward the long-run benefit of all countries. Under what conditions might the removal of all tariff and other impediments to trade work to the best advantage of developing countries? Explain.
Suppose the Heckscher-Ohlin model was modified to
allow for technology differences to exist between two
trading countries. How would this change the
Heckscher-Ohlin model's findings on factor prices,
goods prices, and the gains from trade for each
factor/industry over time? Also, explain how you
would determine which good a country would
import and which good a country would export.
Chapter 4 Solutions
EBK INTERNATIONAL ECONOMICS
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- The parliament of Ghana is debating whether import substitution should take the form of quotas or tariffs. You are asked to brief them on the difference between the two. A representative from Ghana's National Labour Party is particularly worried about consumers? Which policy (tariffs or quotas) is better for consumers?arrow_forwardWe have export and import data of a country for the last two years. In addition, let's assume that we have the list of the most exported goods along with the countries that this country exports and imports to. How do we know if the trade pattern of this country is compatible with the comparative advantage theory? Also, what data do we need if we want to assess whether this country's trade pattern can be explained by the Hecksher-Ohlin theory?arrow_forwardAccording to the Heckscher-Ohlin model, free trade would lead to an equalization of wage rate internationally. Explain why we do not observe that result in the real world, where, for instance, there is great discrepancy in wage rate between developed and developing countriesarrow_forward
- Explain how is the production structure (i.e. which goods are produced) affected in each country by opening up to trade. Is this consistent with the empirical evidence we observe in reality? How can this model be modified to produce a less stark result?arrow_forwardWould the U.S. government gain any advantage from using tariffs or quotas to restrict imports?arrow_forwardFinally, Canada and Australia are both English-speaking countries with not-too dissimilar population sizes. However, Canada’s trade is twice as large as that of Australia’s. to what extent, does comparative advantage help explain this?arrow_forward
- Since many companies cut jobs or outsource overseas when they cannot compete with foreign companies, does that mean free trade is a bad idea and does not serve our interests?arrow_forwardWhich of the following BEST describes comparative advantage? Country A can produce a product at a lower opportunity cost than Country B Country A can produce more of a product than Country B Country A has a currency worth more than the currency of country B Country A uses a smaller amount of a resource to produce than Country Barrow_forwardQuestions D,E,F.arrow_forward
- In the past, comparative advantages have sometimes shifted from one nation to another. What factors do you think caused these shifts? Why? Was there anything a nation could have done to prevent an advantage from shifting to another nation?arrow_forwardSuppose that you are a low-skilled worker employed in a labor-intensive industrial sector and the population of your country is continuously declining. Explain your policy preferences about economic policies of immigration and international trade.arrow_forwardA country is the only producer of a particular prescription drug. This country has a comparative advantage. True or False True Falsearrow_forward
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