IDEAS home Printed from https://ideas.repec.org/p/ags/pugtwp/331900.html
   My bibliography  Save this paper

The Armington-Heckscher-Ohlin model - an intuitive exposition

Author

Listed:
  • Jomini, Patrick
  • Zhang, Xiao-guang
  • Osborne, Michelle

Abstract

Global models of world trade are often used as input into assessing the possible effects of liberalising trade. As simplifications of the economic processes – and the counterfactuals that they are designed to explain – they include many assumptions on which their results depend. Some of the crucial assumptions in global models of world trade include how – and which – gains from trade are captured. One of the main features of global models is the Armington assumption which differentiates products according to their geographic origin and gives rise to certain types of gains from trade. Although some trade is differentiated, trade in homogenous products exists and is responsible for other types of gains from trade. The purpose of this paper is to provide an intuitive explanation for a modification of the standard Armington specification of trade models, to represent gains from trade in differentiated and homogenous products. This modification relies on the identification of on-way trade flows in homogenous products in databases that typically include only twoway trade flows. Illustrative experiments with a 25-country GTAP aggregation indicate that the A-H-O specification can quadruple the estimated effects of reducing tariffs globally in manufacturing.

Suggested Citation

  • Jomini, Patrick & Zhang, Xiao-guang & Osborne, Michelle, 2009. "The Armington-Heckscher-Ohlin model - an intuitive exposition," Conference papers 331900, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331900
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/331900/files/4443.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Christopher Adam & Stephen O’Connell & Edward Buffie, 2007. "Monetary Policy Rules For Manging Aid Surges In Africa," WEF Working Papers 0016, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
    2. Eifert, Benn*Gelb, Alan*Borje Tallroth, Nils, 2002. "The political economy of fiscal policy and economic management in oil exporting countries," Policy Research Working Paper Series 2899, The World Bank.
    3. Breisinger, Clemens & Diao, Xinshen & Thurlow, James & Al-Hassan, Ramatu M., 2008. "Agriculture for development in Ghana: New opportunities and challenges," IFPRI discussion papers 784, International Food Policy Research Institute (IFPRI).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Clemens Breisinger & Xinshen Diao & Rainer Schweickert & Manfred Wiebelt, 2010. "Managing Future Oil Revenues in Ghana: An Assessment of Alternative Allocation Options," African Development Review, African Development Bank, vol. 22(2), pages 303-315.
    2. López-Cálix, José R. & Melo, Alberto & Tinsley, Elaine & Calvo, Sara, 2005. "Creating Fiscal Space for Poverty Reduction in Ecuador: A Fiscal Management and Public Expenditure Review," IDB Publications (Books), Inter-American Development Bank, number 371.
    3. Obeng, Camara Kwasi, 2014. "Impact of import liberalisation on poverty: a dynamic computable general equilibrium and microsimulation analysis for Ghana," MPRA Paper 58182, University Library of Munich, Germany.
    4. Boris Najman & Richard Pomfret & Gael Raballand & Patricia Sourdin, 2005. "How are Oil Revenues Redistributed in an Oil Economy? The Case of Kazakhstan," School of Economics and Public Policy Working Papers 2005-18, University of Adelaide, School of Economics and Public Policy.
    5. Mr. Andrew Berg & Ms. Filiz D Unsal & Mr. Rafael A Portillo, 2010. "On the Optimal Adherence to Money Targets in a New-Keynesian Framework: An Application to Low-Income Countries," IMF Working Papers 2010/134, International Monetary Fund.
    6. Chapoto, Antony & Ragasa, Catherine, 2013. "Moving in the right direction? Maize productivity and fertilizer use and use intensity in Ghana:," IFPRI discussion papers 1314, International Food Policy Research Institute (IFPRI).
    7. World Bank, 2005. "Creating Fiscal Space for Poverty Reduction in Ecuador : A Fiscal Management and Public - Expenditure Review," World Bank Publications - Books, The World Bank Group, number 7296, December.
    8. Naazneen H. Barma, 2014. "The Rentier State at Work: Comparative Experiences of the Resource Curse in East Asia and the Pacific," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 1(2), pages 257-272, May.
    9. Ashby H B Monk, 2011. "Sovereignty in the Era of Global Capitalism: The Rise of Sovereign Wealth Funds and the Power of Finance," Environment and Planning A, , vol. 43(8), pages 1813-1832, August.
    10. Chapoto, Antony & Tetteh, Francis, 2014. "Examining the sense and science behind Ghana’s current blanket fertilizer recommendation:," IFPRI discussion papers 1360, International Food Policy Research Institute (IFPRI).
    11. World Bank & International Monetary Fund, 2005. "Global Monitoring Report 2005 : Millennium Development Goals— From Consensus to Momentum," World Bank Publications - Books, The World Bank Group, number 7325, December.
    12. Kolavalli, Shashi L. & Birner, Regina & Benin, Samuel & Horowitz, Leah & Babu Suresh Chandra & Asenso-Okyere, Kwadwo & Thompson, Nii Moi & Poku, John, 2009. "Public expenditure and institutional review: Ghana’s ministry of food and agriculture," GSSP working papers 17, International Food Policy Research Institute (IFPRI).
    13. Tsani, Stella, 2013. "Natural resources, governance and institutional quality: The role of resource funds," Resources Policy, Elsevier, vol. 38(2), pages 181-195.
    14. Stela Cani, 2009. "Resource Abundance, Mineral Funds and Institutional Quality," Economics Discussion Papers em-dp2009-04, Department of Economics, University of Reading.
    15. Braun, Miguel & Di Gresia, Luciano, 2003. "Towards Effective Social Insurance in Latin America: The Importance of Countercyclical Fiscal Policy," IDB Publications (Working Papers) 1463, Inter-American Development Bank.
    16. World Bank, 2007. "An Assessment of the Investment Climate in Botswana : Volume I, Main Report," World Bank Publications - Reports 7093, The World Bank Group.
    17. Steven Block, 2014. "The Decline and Rise of Agricultural Productivity in Sub-Saharan Africa since 1961," NBER Chapters, in: African Successes, Volume IV: Sustainable Growth, pages 13-67, National Bureau of Economic Research, Inc.
    18. Mohsen Mehrara & Mehdi Sarem, 2009. "Effects of oil price shocks on industrial production: evidence from some oil-exporting countries," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 33(3-4), pages 170-183, September.
    19. Tsani, Stella, 2015. "On the relationship between resource funds, governance and institutions: Evidence from quantile regression analysis," Resources Policy, Elsevier, vol. 44(C), pages 94-111.
    20. Stephen A. O'Connell, 2011. "Towards a Rule-based Approach to Monetary Policy Evaluation in Sub-Saharan Africa-super- †," Journal of African Economies, Centre for the Study of African Economies, vol. 20(suppl_2), pages -66, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:pugtwp:331900. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/gtpurus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.