国际贸易课件C03_Krugman425789_10e_GE.pptVIP

Productivity and Wages Do Wages Reflect Productivity? (cont.) Other evidence shows that wages rise as productivity rises. As recently as 1975, wages in South Korea were only 5% of those of the United States. As South Korea’s labor productivity rose (to about half of the U.S. level by 2007), so did its wages. Misconceptions about Comparative Advantage Free trade is beneficial only if a country is more productive than foreign countries. But even an unproductive country benefits from free trade by avoiding the high costs for goods that it would otherwise have to produce domestically. High costs derive from inefficient use of resources. The benefits of free trade do not depend on absolute advantage, rather they depend on comparative advantage: specializing in industries that use resources most efficiently. Misconceptions about Comparative Advantage (cont.) Free trade with countries that pay low wages hurts high wage countries. While trade may reduce wages for some workers, thereby affecting the distribution of income within a country, trade benefits consumers and other workers. Consumers benefit because they can purchase goods more cheaply. Producers/workers benefit by earning a higher income in the industries that use resources more efficiently, allowing them to earn higher prices and wages. Misconceptions about Comparative Advantage (cont.) Free trade exploits less productive countries whose workers make low wages. While labor standards in some countries are less than exemplary compared to Western standards, they are so with or without trade. Are high wages and safe labor practices alternatives to trade? Deeper poverty and exploitation may result without export production. Consumers benefit from free trade by having access to cheaply (efficiently) produced goods. Producers/workers benefit from having higher profits/wages—higher compared to the alternative. Comparative Advantage with Many Goods Suppose now there are N goods produced, indexed by i = 1,2,…N. The home