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Unformatted text preview: ct may be exported back to the high income
country which first introduced it. (6) This theory does not necessarily contradict HO and Linder: the high
income, skilled-labor-abundant country exports the skilled-labor
It is that a given good is skilled-labor intensive at one point in time,
unskilled-labor intensive later. 7
The Linder Hypothesis seems to explain why the high-income developed
countries trade so much, but not why the low income countries trade so
The following features seem to complete the explanation.
1. The skilled-labor and capital-intensive differentiated goods are high
income elasticity goods.
The high-income countries that produce the differentiated manufactured
goods also spend a high fraction of their incomes on these goods.
Each differentiated good is sold in each market, so trade among the
high-income countries is very high.
The unskilled-labor abundant (poor) countries have a high demand for
the low income-elasticity labor-intensive goods. 8
So instead of exporting a lot of t...
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This document was uploaded on 03/09/2014 for the course ASTRO 3730 at Colorado.
- Winter '14