2.1 Specific Factors model in Atlantic Economies

2.1 Specific Factors model in Atlantic Economies - T he...

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The specific factors model fits the trade patterns and flows between the Atlantic economies during the first globalization wave. Simply state this model, its theoretical implications, and contrast them with the actual experience of the peripheral and core countries citing appropriate evidence as necessary. - Countries will specialize in the production of the good in which they have a comparative advantage o Comparative advantage = opportunity cost of producing a good in terms of other goods is lower in that country than it is in other countries o Comparative advantage arise because of technological differences and differences in the productivity of labor o Explains patterns of trade - In principle, all countries can gain from trade o Allows countries to produce past their production possibilities frontier - Wages do not become equal across the countries o Technological differences o And differences in productivity o Countries with higher absolute advantage in both goods will enjoy a
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This note was uploaded on 04/19/2010 for the course ECON 430 taught by Professor Arroyoabad during the Fall '10 term at Middlebury.

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2.1 Specific Factors model in Atlantic Economies - T he...

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