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Модель Специфических Факторов Производства При Разном Уровне Технологического Развития: Почему Неэффективная Промышленность Лучше, Чем Никакой Промышленности Совсем
[Specific Factors Model When Countries Have Different Technologies: Why Inefficient Industry is Better Than no Industry at All]

Author

Listed:
  • Spirin, Victor
Abstract
According to the specific factors theory, in free trade between two countries the capital-abundant country exports capital-intensive goods, while the labor-abundant country exports labor-intensive goods. This theory explicitly assumes that the trading partners possess identical technologies, and the difference in the amount of goods produced is solely due to the differences in factor endowments. In effect, opening to trade between two countries with different factor endowments is an optimization problem that optimally redistributes labor between the types of goods produced given the available capital. In this optimization problem both trade participants benefit from free trade. But if the two countries possess different technologies, the optimization problem leads to the destruction of capital in the country with less efficient technology. While the main conclusion of the theory – that capital-abundant (advanced) country will export capital-intensive goods and vice versa – will hold, the country with less efficient pre-trade technology will lose the technology altogether, and the total output of that country will fall as a result of the free trade.

Suggested Citation

  • Spirin, Victor, 2023. "Модель Специфических Факторов Производства При Разном Уровне Технологического Развития: Почему Неэффективная Промышленность Лучше, Чем Никакой Промышленности Совсем [Specific Factors Model When Cou," MPRA Paper 116218, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:116218
    as

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    File URL: https://mpra.ub.uni-muenchen.de/116218/1/MPRA_paper_116218.pdf
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    References listed on IDEAS

    as
    1. Spirin, Victor, 2021. "Ricardo Through the Looking Glass: (Mis)adventures of Comparative Advantage in Developing Economies," MPRA Paper 107780, University Library of Munich, Germany.
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    More about this item

    Keywords

    Vanek-Reinert effect; free trade; standard model; macroeconomic effect of globalization;
    All these keywords.

    JEL classification:

    • F6 - International Economics - - Economic Impacts of Globalization
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development

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