Display:
Read Krugman's numerous works on the topic and for which he was awarded the Nobel prize last year. What he found was that most trade occurs NOT between countries with comparative advantages between each other, but between countries with almost identical factor costs in labor, capital, regulation, unionization, etc.  Most trade occurs between countries that are almost entirely alike.  US-Canada. EU-EU. Japan - US.  Etc.  Krugman asked how this could be true if the neo-classical trade theories of Storper-Samuelson (which models trade as returns to labor and capital in different countries) or Heckscher-Ohlin (a more advanced version of the classic Ricardo model of abundant and scarce factors) were also true, and he finds that they can't -- that another explanation of trade was required to explain the most common type of trade in the late 20th century-- intra-firm transfers.  
by santiago on Fri Dec 11th, 2009 at 10:03:28 AM EST
[ Parent ]
That would be trade measured in money right?

So if 5 tons of raw materials are shipped from country A to country B that keeps 4 tons within their borders and sell 1 ton (with labor added) to country C for more then 5 times the value/ton of the original raw materials most of the trade will be between B and C?

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Tue Dec 15th, 2009 at 06:25:39 PM EST
[ Parent ]

Display:
Login
. Make a new account
. Reset password
Occasional Series