Breaks in the Chain of Comparative Advantage
AbstractThe chain proposition of comparative advantage states that when factor prices differ between two countries producing many products with two factors, every export of the capital abundant country would be more capital intensive than any of its imports. The present note points out that an economy has the option to break the chain to reach full employment if its factor endowment is not spanned by the production cone of the more intensive products.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 31264.
Date of creation: 04 Apr 2010
Date of revision:
Publication status: Published in International Review of Economics and Finance, April 2010, vol. 19 no. 2, pp. 346-348
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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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chain; comparative advantage;
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- John Romalis, 2004. "Factor Proportions and the Structure of Commodity Trade," American Economic Review, American Economic Association, vol. 94(1), pages 67-97, March.
- Nevin Cavusoglu & Bruce Elmslie, 2005. "The Chain Version of Comparative Advantage: An Empirical Investigation," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 141(3), pages 404-421, October.
- Bhagwati, Jagdish N, 1972. "The Heckscher-Ohlin Theorem in the Multi-Commodity Case," Journal of Political Economy, University of Chicago Press, vol. 80(5), pages 1052-55, Sept.-Oct.
- Deardorff, Alan V., 1979. "Weak links in the chain of comparative advantage," Journal of International Economics, Elsevier, vol. 9(2), pages 197-209, May.
- Chao, Chi-Chur & Yu, Eden S.H., 2007. "Trade liberalization, foreign ownership, and the environment in a small open economy," International Review of Economics & Finance, Elsevier, vol. 16(4), pages 471-477.
- Choi, E. Kwan, 2008. "Factor growth and equalized factor prices," International Review of Economics & Finance, Elsevier, vol. 17(4), pages 517-528, October.
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