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Factor Endowments and Comparative Advantages of East Asia

Author

Listed:
  • Tri Widodo

    (PhD Candidate, Hiroshima University of Economics)

Abstract

Factor endowments play important roles in international trade. Firstly, this paper describes the Heckscher-Ohlin theory in the general equilibrium (GE) framework. Secondly, this paper examines two crucial assumptions in the Heckscher-Ohlin (H-O) theory i.e. assumptions on production (technology) and consumption (tastes and preferences). Thirdly, this paper examines the comparative advantage of East Asian countries, which have large discrepancies in the factor endowments. By applying Revealed Symmetric Comparative (RSCA) index, this paper concludes that China, Indonesia and Thailand have comparative advantage in unskilled labor-intensive industries, meanwhile only Japan has comparative advantage in technology-intensive industries for the last two decades. The shifts in comparative advantage strongly support “flying geese” paradigm in East Asia.

Suggested Citation

  • Tri Widodo, 2008. "Factor Endowments and Comparative Advantages of East Asia," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 56, pages 215-241, August.
    • Handle: RePEc:lpe:efijnl:200811
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    More about this item

    Keywords

    Factor Endowments; Factor Intensity; Comparative Advantage;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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