lecture note 9

6 5 finally the original product may be exported back

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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 intensive goods. 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 little. 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.

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