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* Ch6. International trade,economic growth factor mobility 6.1. introduction Growth of economic Be caused by growth of K,L and Technology. Y=f(K,L,T) Will change the PPF income budget. Affects both producers’ consumers’ decisions Both of their decision have implications for the country’s participation in international trade trade welfare. * Assumptions: increasing opportunity cost can not influence world price (small country) growth occur effects of production growth neutral production effect protrade production effect ultra-protrade Production effect antitrade production effect ultra-antitrade production effect 6.2. Trade effect of growth: neoclassical approach 6.2.1 production growth effects (生产效应) * 6.2.3 ultimate impact of economic growth on trade 6.2.2 consumption growth UL. Pro PE Pro PE Neu. PE An-PE UL. An-PE UL.Pro CE + + + ? ? Pro CE + + + ? ? Neu. CE + + 0 - - An-CE ? ? - - - UL. An-CE ? ? - - - * 6.3. Growth of factors 6.3.1 growth of factors and change of trade welfare The supply of a factor grows over time. It affect international trade and welfare of trading countries. Change of endowment and it effects on trade (Rybczynski Theorem ) Without change of the price, an increase in a factor endowment will increase output of the industry using it intensively, and decrease the output of the other industry. An Increase of the abundant factor will have Ultra-Pro-trade Production Effect; An increase of the scarce factor will have Ultra-Anti-trade Production Effect; * Assumed that: H-Country is L-abundant; sector 1 is L-intensive, sector 2 is K-intensive. Results: Increasing of the labor (without change of K) will have Ultra-pro-trade effect; increasing of the K (without change of L) will have Ultra-anti-trade effect; For a small country, factor growth always increases national income and welfare (because growth does not affect prices) * 6.4. Effects of technological change on trade 6.4.1 J.R. Hicks’s categrious of technical progress
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