I国际贸易英语第三章讲义.docVIP

International Trade Theories Chapter 3 Modern Trade Theories (2) This chapter examines four more modern trade theories: the H-O theory of factor endowments, Leontief paradox, the product life-cycle theory and the “Gravity” of trade model. The Heckscher-Ohlin Theory (of Factor Endowment) (1) The meaning of the Heckscher-Ohlin theory Although sometimes this theory is also referred to as the Heckscher-Ohlin model or the factor endowment model, more often that not it is called the Heckscher-Ohlin theory or simply the H-O theory. H-O theory is one of the most influential theories in modern international economics according to which international trade is largely driven by differences in countries’ resources (land, labor and capital). This theory is called this way, because it is developed by the two well-known Swedish economists, Eli Heckscher and his student, Bertil Ohlin (He received the Nobel prize in economics in 1977). (2) Major points of view in the H-O theory The following is a brief introduction to the chief points of view made by Heckscher and Ohlin. ● Different nations have different factor endowments and different factor endowments explain differences in factor costs. ● Differences in relative factor endowments and factor price constitute the most important explanation of the basis for (international) trade. ● A nation will export the commodity in the production of which a relative large amount of its relatively abundant and cheap resources is used. Conversely it will imports commodities in the production of which a relatively large amount of its relatively scarce and expensive resources is used. ● With trade the relative differences in resources prices between nations tend to be eliminated or to be equalized as result of continuous specialization in the production of the commodity of a nation’s comparative advantage. ● H-O theory also emphasizes the interplay between the proportions in which different factors of production are available in different co