Classical Trade Model And Factor Intensity Economics Essay

Classical Trade Model And Factor Intensity Economics Essay The Ricardian models main focus is on comparative advantage, one of the most central ideas in international trade theory. This theory states that countries should specialize in the production of what they produce best, thus completely specializing instead of producing a wide variety of goods. The neo classical model or Heckcher-Ohlin theory differs from this, it stresses that countries should produce and export goods that require factors that are abundantly available. This theory then differs from those assumptions of comparative and absolute advantage since they only focus on the productivity of the production of a good. On the other hand, the Heckcher-Ohlin theory states that a country should concentrate production and exports based on the factors that are abundantly available to them and thus the cheapest to produce. The main idea of the model centres itself around the differences in factor endowment, the variations of factors (Land, Labour, Capital and Entrepreneurship) that a country have and can then make use of for manufacturing. These factors of production determine a countries comparative advantage, so a country then has a comparative advantage in the goods that are richly local and available to them, this then allows for trade flow. A country must also take into consideration costs, if a good requires local inputs that are abundantly available to that country then production is going to be cheaper, rather than engaging in the production of goods that are locally scarce. This introduces the concept of factor intensity, where producers use different ratios of factors of production in order to produce different goods. A country has been seen to use this concept if that country has a comparative advantage in a good whose production is intensive in the factors that are copiously available. To i llustrate an example we could take oil refining for instance, this can be said to be capital intensive as it is expensive to produce, on the contrary if we take the production of clothing as an example this can be said to be labour intensive. To outline this factor abundance theory, and give a better understanding of its main features we can look at its general structure/assumptions made: General Structure/assumptions of Neo Classical Model (Factor Abundance Theory)  [1]   2 x 2 x 2 model (two countries, two final goods, two factors of production capital and labour) This model has variable factor proportions between countries: so that countries which are extremely developed have a comparatively high ratio of capital to labour in relation to developing countries. This then makes the developed country capital intense/abundant relative to the developing country, and makes the developing country labour intense/abundant relative to the developed nation. Constant returns to scale : double input = double output ( X = 2, Y = 4) Identical Production technology everywhere Input factors capital and labour (KL) are mobile between sectors, but not between countries. All markets characterized by perfect competition, no barriers for trade, and no transport costs. Demand structure is the same, homothetic preferences Available amount of factors of production may differ (endowment may differ). These differences in factor abundance will give rise to international trade flows. Main Results of Neo Classical Trade Theory  [2]   These assumptions have given light to certain named conclusions, and have formed the main results of the neo classical trade model. They are as follows: Factor Price Equalization Theorem International trade of goods between two countries leads to an equalisation of the rewards of the factors of production the two countries. E.g. equal in capital rental rate (workers in each country are paid the same) Stopler Samuelson Theorem An increase in the price of a final good increases the reward to the factors of production, used intensively in the production of that good. E.g. if the price of a final good (paper) increases, then the price of wood would also increase Rybczynski Theorem An increase in the supply in a factor of production (K,L) results in the increase in the output of the final good that uses this factor of production relatively intensively. E.g. workers used intensively so will therefore result in an increase of output. Heckscher Ohlin Theorem A country will export the good which intensively uses the relatively abundant factor of production. In tackling this question as to why Marks and Spencer may switch manufacturing to a less developed country, the main focus will be upon the Factor Equalisation Theorem. This theorem suggests that when the prices of the output goods in this case clothing are equalised between countries as they come closer to trade, then the prices of the factors (capital and labour) will also be equalised between nations. This equalisation happens as a result of the countries being price takers due to perfect competition. Ohlin makes it clear that he himself did not actually think that the rewards for the factors of production would b equalised between two countries, just that there is likeliness that they would become more equal.  [3]  This becomes understandable when we know that the factors of production that are in abundance in one country are scarce in the other. Prices are equalised due to the assumption of perfect competition, if markets for clothing were open on the international market, the prices that they charge for clothing will be the same in both countries. Because of this reason, the factors of production will also be the same for both countries. In relation to the question, based on the factor equalisation theorem, production can switch to a different country solely on the concept of factor intensity. Moving production to a less developed country may be because labour is abundant in that country, therefore more efficient in the production of clothing. Even though both countries produce the same output at the same wage rate, there are differing amounts of capital and labour being used. To distinguish the amounts of labour and capital used we use the isoquant/isocost framework that is derived from the Cobb Douglas production function. Cobb Douglas Production Function Y = KyÃŽÂ ±y Ly1-ÃŽÂ ±y Y Production level of output Y K Amount of capital used in manufacturing sector L Amount of labour used in manufacturing sector ÃŽÂ ±y parameters (measure of capital intensity) This equation allows the substitution of one input for another, that is to produce the same level of output with different combinations of inputs, in principle; an infinite number of possibilities are available in order to produce the same level of output. We can also form an Isoquant graphical figure which is derived from this function; in unit terms the Cobb Douglas becomes the isoquant. Figure 1 shows an isoquant, which depicts all possible efficient combination of capital and labour able to produce giving the same level of output. Taking into account the concept of factor intensity, the country wants to produce using the factor that is abundantly available to them giving them leverage and making production more efficient on their part. Figure 2 shows the same isoquant but with the isocost lines added. Because we are looking at the production of clothing, which is labour intensive, we would prefer to be using labour as the main factor of production, meaning we would want a new optimal point (point B) where more labour is used than capital. Figure 2 shows this change in optimality making the isocost line flatter, the first move is that the isocost line pivots/rotates due to a lower wage rate, secondly it moves parallel until intersection point (becomes tangent) and shifts down until new optimal point (point B) at lower wage rate. Point A shows the point where capital is high (capital intensive), and point B is the complete opposite where labour is high (labour intensive). At point B, the production of clothing in the developing country is efficient and best suited as it is a labour intensive country. To conclude I will give the limitations of the model and then go on to relate the question and model in real life terms. Limitations/Criticisms of model Lieontief paradox argues with the main propositions made. Found that the US, despite having a relative abundance of capital, tended to export labour intensive goods and import capital intensive goods. That technology is the same The factor equalization theorem applies only for most advanced countries. Wage discrepancies are not normally in the scope of the H-O model analysis Identical production function The standard Heckscher-Ohlin model assumes that the production functions are identical for all countries concerned. This means that all countries are in the same level of production and have the same technology. This is highly unrealistic. No unemployment Unemployment is the vital question in any trade conflict. Heckscher-Ohlin theory excludes unemployment This question is related to clothing and production, therefore we assume that it refers to labour as its main factor of production, thus taking into consideration the concept of factor intensity we can say that it is labour intensive, furthermore unskilled labour intensive. The majority of exports and main share of production has been found to originate in that of the developing world. The high labour intensiveness of the industry has meant there is very strong encouragement for companies to shift production to a lower labour cost area. These labour costs heavily weigh the choice in which location to manufacture; strong financial incentives push production ideas into relocating this labour intense production process to a low labour cost area. The production of these goods in a developing country would have its competitive advantages for example cheaper raw materials and cheaper labour costs. From this we can build upon the idea of cost minimisation, the main incentive for a country i s to lower its costs and maximise its profits based on production decisions. In reality, the factor equalisation theorem does not hold, wages are not equal between countries. In the UK we have a minimum wage, and if we take a less developed country such as Vietnam this minimum wage is nonexistent and workers in the garment sector are paid as little as 49 cents.  [4]   Companies such as Marks and Spencer are in business to profit maximise through cost minimisation, moving to a less developed country for manufacturing is cheaper for the company itself due to the country being labour intensive and the goods produced need this high labour intensity. Under pressure to keep prices low, most retailers look for cheaper sources of clothes than cut profit margins, therefore relocate and base their relocation on quota allocation, delivery time, infrastructure and most importantly labour costs. So an incentive to relocate to produce goods at a lower cost seems the cheaper, efficient and best move to make.

Soundtrack of My Life

Zachary Smith English 1100 Soundtrack of my life Music is one of the greatest and most influential devices that we as humans deal with on a day to day basis. It plays such an important role in our lives and helps build character without us ever thinking twice about it. In today's society there are so many types and genres of music that you can find a song for any type of mood that you're in. Music has the power to bring thousands of people from opposite walks of life together.When I stop and think about the songs that bring up the best memories it creates a wide spectrum of genres. Ranging from Garth Brooks the â€Å"Thunder Rolls† to classical Ave Maria, to Bone Thugz N Harmony and Sweetish Rock band by the name of Volbeat. The list of songs to come not only have personal stories behind each and every one of them, but they also tell a timeline from my earliest memories as a child growing up with three older brothers, to the highs and lows of being a teenager in high school, a nd to spending a year in Afghanistan.  Like read about memories? Read also  Flashbulb memory!Being the youngest of 4 boys growing up I didn't get to make a whole lot of decisions for myself, and to be honest I didn't really care I just rolled along with whatever Jake, Kyle, and Nate wanted to do. Growing up in the country and living on a farm we naturally became conditioned to listening to country music. At that time Garth Brooks was the country artist hot on the scene. I can remember watching some of his music videos on TV and thinking that he was the coolest guy ever. One of my greatest memories with my brothers is Garth Brooks had a live concert on TV and all of us boys decided to put on a concert of our own.We all ran to the garage and grabbed instruments that could be used as guitars and drum sticks and then raced through the house, meanwhile ignoring moms yelling of â€Å"no running in the house,† and then back down stairs as fast as we could for the start of the co ncert. As the concert went on my brothers and I were jamming away on our fake musical instruments when the song â€Å"Thunder Rolls† came on. I can vividly remember watching Garth Brooks walking on stage, and at the start of the song it was pouring down rain and lightning flashes were oing off everywhere and I couldn't believe what I was seeing. As a kid I sat there awestruck with amazement watching his every movement believing he was in an actual thunderstorm. Seeing Garth Brooks standing there soaking wet from head to toe has left a forever image in mind that I will always associate and think of when I listen to his music. Growing up as a young boy I could remember that whenever I would be in the car or somewhere near a radio station, mom would always have country music playing and I believe that's where I get my love for country music from.On the flip side with dad, he introduced me to the world rock. Great artist such as Guns N Roses, Lynyrd Skynard, and AC/DC. The song f rom the classic rock genre of music that has really stuck with me is â€Å"Free Bird† by Lynyrd Skynard. â€Å"Free Bird† was my getaway song, the song that put me at ease whenever I needed to relax from the stressful life of young boy, because mom didn't pack my lunch right or I couldn't go play with my friends. As we all know, these are troubling times in a young boys life and â€Å"Free Bird† was always there to bring me back down to earth.In the short 10 to 15 years that I have been able to really comprehend what music is, there have been very few songs that have really given me goose bumps. Once again a country artist by the name of Toby Keith came out with a song in 2003 entitled â€Å"American Soldier. † As every young boy does, they think and will argue about having the coolest dad in the world, but no, really I do. I can remember sitting in my parents' bedroom late on Sunday nights and just wait for my super hero dad come walking in, in his black and green army uniform with his dark as night glistening combat boots.Seeing him walk through that doorway would be the highlight of my weekend. In Toby Keith's song he describes the â€Å"American Soldier† by saying † I can't call in sick on Mondays when the weekends been to strong, I just work straight through the holidays and sometimes all night long, You can bet that I stand ready when the wolf growls at the door, hey I'm solid, hey I'm steady, I'm true down to the core. † To me those lyrics perfectly portray what I see in my dad, so every time I hear that song I can't help but think about him and get goose bumps again.By the time high school rolled around I had made it through my embarrassing boy band phase and found myself listening to the likes of NAS, Kanye West, Outkast, and my absolute favorite Bone Thugz N Harmony. Every day after school let out my brother Nate and I would meet up at his green 94†² Ford Ranger with pins in the hood, dents in the d umpers, and scrapes in the siding, as we headed to another day of soccer practice. While on the way we would blast our Bone Thugz and pathetically attempt to try and rap along.We used the lyrical talent of artist like Outkast, Kanye, and Bone Thugz to get is ready for another sweat pouring, muscle aching, tiresome practice. Just to turn around and to do the exact same routine again the next day. For many young adults, college can be a confusing time in their lives. My first go around at college Lil Wayne was the new biggest coolest artist on the scene and rap was becoming ever more popular. Instead of flocking toward the rap music like most college kids did at the time, I moved in a different direction.A direction that you normally don't find among the young college scene, and that was toward classical, opera, and piano music. Even till this day I can't pin point exactly what it is about classical, opera and piano music that intrigues me so much. I think that part of my attraction t o this style of music is that I find it very relaxing and mind calming. There have been numerous covers of â€Å"Ave Maria†, and my favorite would have to be done by Franz Schubert. This is where the start of my new appreciation of music began.It wasn't until I listened to Franz Schubert singing â€Å"Ave Maria† that I really listened carefully and opened my eyes to the pure God given talent and beauty of her voice and I found that immensely more satisfying to listen to instead of something that would of been created in a studio. Now I currently enjoy listening to musicians like Michael Buble' and Norah Jones and have gained an appreciation for the artists who use their true vocal talents. Furthermore, during my first stint in college I joined the military and was deployed to Afghanistan in 2012.The life of a soldier is pretty single and strait forward. You wake up and go to work. Whatever you want to do before and after work is up to you, so like most soldiers I used some of my free time to go to the gym and workout. Everyone has that genre of music or artist that will get them pumped up and ready, like most soldiers, I get wound up by loud, fast pace music that gets that red fluid inside me boiling. Through a fellow soldier I was introduced to a Swedish metal group called Volbeat, which I surprisingly enjoyed because it is the complete opposite style of music that I enjoy.For the remainder of the deployment when I visited the gym, Volbeat and Avenge Sevenfold served as my constant to get me through my workouts. No one knows what our futures will hold. We have no idea what kind of trials and triumphs lie awaiting us. One thing that we can bank on is music. Music is one of the very few constants that pass by from generation to generation. A world without music would be a creature that I would never like to see. When we scour the caverns of our brain some of our greatest memories are associated with music.I'm a firm believer in that everything hap pens for a reason because it shapes the type of person we are today. The same thing applies with music. Looking back over my life, there was a phase for each type of genres of music that I listened to. In my 23 years, my musical interest have ranged from country, to boy band, to rock, to classical and metal and I don't think I would be the exact way I am today without having all of those music genres in my life. In 23 years I have created so many great memories through music and I can only hope that God blesses me with another 23 years to make more memories.

Notes On The De La Ciudad - 716 Words

Cada ciudad que visitas tiene sus propias esculturas y estatuas à ºnicas, pero algunos realmente te hacen ver dos veces y algo mà ¡s. Las esculturas mà ¡s singulares y sorprendentes conocidos para capturar los ojos de todos los que pasan se pueden encontrar escondido en las calles secretas y difundido en las plazas de la ciudad:. Hay muchas esculturas y estatuas (nuevos y viejos) actualmente provocan la conversacià ³n y la intriga. Únete a la diversià ³n mirando a travà ©s de estas fotos de las 25 estatuas mà ¡s increà ­bles y esculturas se encuentran en todo el mundo. 1. Expansià ³n, Nueva York, EE.UU. Cuando la luz se arrastra fuera de las grietas del cuerpo de esta estatua, un mundo de mensajes son retratados por el artista Paige Bradley. Todas las piezas son echados en bronce e hizo flotar por separado el uno del otro. mundos-la mayorà ­a-creativas-estatuas-4 2. Salmà ³n Escultura, Portland, Oregon, EE.UU. Busque el salmà ³n en la calle Salmà ³n! Esta estatua pescados enrrollados ocupa el puesto # 32 de 676 atracciones en Portland-haciendo de este pescado con terribles objetivo un tipo gilled popular! mundos-la mayorà ­a-creativas-estatuas-12 3. Los Zapatos En El Banco de Danubio, Budapest, Hungrà ­a Este monumento en Budapest creado por Can Togay y Gyula Pauer conmemora los Judios asesinados por los fascistas Flecha Cruz durante la Segunda Guerra Mundial. Los zapatos simbolizan las và ­ctimas que fueron obligados a quitarse los zapatos antes de recibir un disparo en la orilla del agua.Show MoreRelatedAnalysis Of An Inspector Calls By Mendoza Okara Utilises Onofre Bouvila1177 Words   |  5 Pagesfiguratively, due to his impoverished upbringing and working class background. â€Å"corrià ³ hacia la mesa presidencial†¦ Al llegar a la mesa advirtià ³ que no quedaba una sola silla libre, ni un cubierto reservado para à ©l.  ¿Quà © haces aquà ­ parado como un pasmarote? 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