• How does the Leontif paradox challenge the overall applicability of the factor-endowment model? To understand how the Leontif paradox challenges the overall applicability of the factor-endowment theory, you must first comprehend what the factor-endowment theory asserts. The factor-endowment theory states that trade between nations is based on the difference in pretrade product prices. Pretrade product prices are dependent on production possibilities. Production possibilities can be linear as in constant cost conditions or curved as in increasing cost conditions. Based on the cost per unit, a county will specialize in the production of a product that they have a comparative cost advantage. According to the factor-endowment theory, a nation will export that product for which a large amount of the relatively abundant resource is used, whether its labor, raw materials or capital. It will import that product in the production of which the relatively scarce resource is used (Carbaugh 68). So nations with a large population representing cheap unskilled labor will export manufactured goods that it can produce cheaply. A nation with abundant capital but more expensive labor will export products that take a more skilled labor force that other nations cannot produce at a reasonable cost. “Following the development of the factor-endowment theory, little empirical evidence was brought to bear about its validity” (Carbaugh 68). For some economists, such generalizations were sufficient to illustrate the validity of the factor-endowment theory but others demanded stronger evidence (Carbaugh 79). In 1954 Wassily Leontief was the first to attempt to test the factor-endowment theory with real data. It was well known that the... ... middle of paper ... ...goods. According to the World Trade Organization International Trade Statistics 2013, between 2005 and 2012 Asia’s worldwide exports manufactures increased from 31.7 % to 38.5% while North America’s decreased from 15.1% to 13.8% (WTO 80). Granted this is manufactured products as a whole rather than by commodity but it represents a trend regarding manufactured goods where Asia’s exports are increasing while North America’s exports are decreasing. This indicates that that manufacturing is continues to move from North America to Asia. Works Cited Carbaugh, Robert J., “International Economics”, 12th ed., Mason, OH: Thomson South-Western, a part of the Thomson Corporation, 2009. “International Trade Statistics 2013”, World Trade Organization, (2013), p 80, Web. 01/17/2014,
Steger, M. B. (2003). The Economic Dimension of Globalization. Globalization: A Very Short Introduction. London: Oxford University Press.
Country Reports on Economics, Policy and Trade Practices: Courtesy of UM- St Louis. (2000). Available:gopher://gopher.umsl.edu:70/00/library/govdocs/crpt/crpt0029
Bentley, J., & Ziegler, H. (2008). Trade and encounters a global perspective on the past. (4th ed., Vol. 1, pp. 182-401). New York: McGraw-Hill.
McConnell, C., Brue, S., & Flynn, S. (2012).Economics: principles, problems, and policies. (19 ed., p. 375-390). McGraw-Hill/Irwin. Retrieved from http://online.vitalsource.com/books/0077771699/id/L4-1-1
McConnell, C. R., Brue, S. L., & Flynn, S. M. (2012). Economics: Principles, Problems, and Policies - Nineteenth Edition. New York, NY, USA: McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc.
There are three main categories of jobs that will not be, that is cannot exported as described by Friedman. “The first is the specialized people, celebrities and those who have special skills like surgeons. The next are local jobs that require face to face and hands on activity. For example plumbers, dentist, and teachers. Lastly the third category is the largest portion it...
After the failed International Trade Organization, Rodrik discusses the Bretton Woods Agreement, the transition from the General Agreement on Tariffs and T...
[15]. Andrei Shleifer and Lawrence H. Summers, 1990. Journal of Economics Perspectives, Vol. 4, No. 2, Spring 1990, pp. 19-33
Strange, S. (1994), ‘Wake up Krasner! The world has changed’, Review of International Political Economy, Summer 1994, 1 (2), pp. 209-20, Taylor & Francis, Ltd.
O'Sullivan, A., & Sheffrin, S. (2005). Economics. Upper Saddle River, New Jersey: Pearson Prentice Hall.
Gilpin, Robert. Global Political Economy: Understanding the International Economic Order. Princeton: Princeton University Press, 2001. Print.
Balaam, David. Introduction to International Political Economy, Upper Saddle River, New Jersey, Pearson Education, 2005.
...stinguish that a qualitatively new type of worldwide trade was developing. The illustration in United stated since the late of 1980 showed that “has less productive portions moved offshore which lead to a decrease in employment while maintaining higher value-added parts. Consequently, all the productivity has risen, while the tradable sector has increased employment” (Spence and Hlatshwayo,2011).
Hubbard, R. G., Garnett, A., Lewis, P., & O’Brien, A. P. (2010). Essentials of economics.
Several decades ago I used to enjoy an occasional lunch in with the late Professor G. Warren Nutter, a distinguished economist who taught at the University of Virginia. Professor Nutter had considerable expertise in comparative economic systems, particularly that of the former Soviet Union. While he had a deep understanding of economic theory, he always stressed that markets do not operate within a vacuum and we gain a greater understanding of human behavior if we paid attention to the role of institutions and other non-market forces.