Ricardian Trade Theory: Overview and Analysis

Ricardian Trade Theory: Overview and Analysis The Classical trade theory: Ricardian Trade Theory (Comparative advantage trade theory) Introduction Ricardian Trade Theory David Ricardo points out the Ricardian Model in 1817. Different countries had differences in productivity and technology. Hence, those differences would cause comparative advantage trade. There are two mainly points of Ricardian Model; firstly, the different rates of labor productivity between different countries had important position in international trade. Secondly, the model of trade is dependent on comparative advantage, not absolute advantage. On the other words, According to Evans, H. D (1989), comparing two countries, a country had absolute advantage in the production of two goods, and the other on was in absolute inferiority. The assumption is: the two goods had different productivity in both countries (one goods productivity is more efficiency than the other one in a country). The advantage country got comparative advantage in one advantage good, and inferiority country got comparative advantage in one disadvantage good. Both countries produce their comparative advantage go ods, moreover, both countries export the comparative advantage good and import comparative disadvantage good, then both countries could got benefits from this international trade. This is the principle of Ricardian comparative advantage trade theory. As lecture notes point out and Porter,M.E (1998) concluded, the Ricardian Comparative advantage trade theory is based on the assumptions followed: 1, there are only two countries, A and B. 2, both countries are only produced two goods. 3, when the goods were producing, there are different technology between two countries, A and B. Hence the different degrees of technology level affect different productivity and capital. 4, this model only got the goods to goods trade assumption. There is no complicate trading. (Both goods got same price, however the cost of production was not equal). 5, labor market supply was fixed. 6, labour can mobile inside the country, however, is not mobile across countries. 7, in countries, goods and markets are perfect competition. 8, there is no tariff and transportation cost. 9, productivity of labor is fixed. (Means the degree of technology would not increase during trading.) The theory generally assumes that the relative supplies of these two particular commodities are based on their relative productivity and technology. Hence, every country got varies productivity or technology; the endowments were the factor of their relative the productivity. This theory presented two countries are endowed with different level or degree of the production factors, and the naturally determined endowments, country would follow the endowments to trade the comparative advantage goods to the other one. These affect the two countries international trade more efficient and decrease the cost of capital for both countries. Moreover, with constant productivity, both countries could benefit from the free international trade even one country is in absolute disadvantage. Takumi Naito (2012) concluded the Ricardian model of trade and growth. He concluded from the assumption and gets one results: if two countries got larger comparative advantage, the benefit for both countries are ge tting huger. We can easily contact the relationship between advance country and developing country. With the simple example, United Kingdom and India trade with the grains and textile during the law of comparative advantage coming out. Hence, the textile production in UK requires less labour hours required in the grains producing: UK got the comparative in producing cheese. Same as India, India has comparative advantage producing grains. Therefore, there are gain from international trade if UK product the textile and India product grains. The Ricardian Model really proved UK free international trade in grains. Under those assumptions, Ricardian model ignores many product factors besides labor. David Ricardo explained the reason of international trade under different efficient of labor production. There are huge advantages for developing the international trade with this classic model. Firstly, this model comes from the law of comparative advantage, and help the United Kingdom got the solution to the grain crisis from 1815. Secondly, although Ricardian Model only showed its pedagogical importance, the classical emphasis on different productivity and the cost of labor has been utilized by the neoclassical focus on factor endowments. (Stephen S.G, 2000) thirdly, older tests, such as MacDougall, 1951 and Stern, 1962 were highly successful. Hence, it is valuable for us to know how this basic pedagogical model performs empirically with the large recent data. The empirical Validity of the Model and the Relevance of the Empirical Work In these parts, this paper would show the strengths and weaknesses of Ricardian Model, from the points of empirical. The core meaning as mention before: follow the law of comparative advantage; the country would to do specialized production for only one goods which is comparative advantage good. We cannot reject this theory points with the literature evidence; however, we could prove some empirical evidence to discuss the advantage and disadvantage for the international trade. Basic Ricardian Model The Ricardian Model focus on the technology and labour productivity. As the comparative advantage theory mentioned, the labour costs also is the important elements of this model. Now, based on the research of Stephen S.G (2000) we represent ‘Aa’ to the labor requirements of every single unit in country a, and ‘Qa’ is the value-added in country a. represent the ‘La’ as the labour employment in country a: We can see easily, the Aa is unit labor requirements, that means the value of Aa get higher, the productivity of country a getting lower. Hence, the main points of ricardian model are increasing total productivity of whole country, the Aa needed to lower. Coming from the assumption of Ricardian Model, the labour is fixed and not crosses to the other country. Therefore, the La is fixed, we keep the La constant. So, the productivity is dependent on the totally value-added Qa. Hence, we can conclude: Ricardian Model would success, there would be a huge enough different productivity between two countries. Or there would not gain from the free trade. We could also use b to represent the country b. hence, Ab, Lb, and Qb are all represent same means in country b. as the labour cost we can defined as the Ca and Cb. Then, Wa and Wb represent as the wage of employees in countries a and b. we assume the exchange rate between a and b is 1:1. We use ‘Rab’ as the rate of Ca and Cb. The function can be showed: We can see, if Rab smaller than 1, that means country a cost lower than country b, country a got comparative advantage good that should export goods. If Rab bigger than 1, that means country a should import goods. (All the functions are all represent one same good between two countries) From this function, we can see one possible: Rab is equal to 1. Hence, there is no comparative advantage between country a and b (the absolute advantage country got same rate in both goods with the absolute disadvantage country), which means, there is equal disadvantage and equal advantage. This is one of the disadvantages of Ricartian Model. Empirical work of Ricardian Model With the basic Ricardian Model, we could learn from the empirical studies to find out the strengths and weaknesses. First of all, this paper would discuss the empirical theory from MacDougall (1951). This case study used the ratio of US exports to UK exports. The dependent variable can be presented as both exports. And he used the productivity as the main independent variable. He used the total exports between US and UK. He collected 25 industries from UK and US in 1937. With his findings, he set the hypothesis: the wage rate is the same level as the labour productivity between US and UK. He used the 1937 data; those data showed US wage rate is double to UK wage rate. And we can follow the function in top; there is same reason that US got the comparative advantage in exports. Then he used the simple measures, he found the results that 20 of the 25 products follow the ratio. There are bigger than one. Hence the results are support the Ricardian Model. Secondly, the case study of Stern (1962) same as MacDougall, they both compare the totally exports between US and UK during different periods. And both used the productivity as the main independent variable. The results is 33 of the 39 sectors follow this ratios, as same as results of MacDougall could support for Ricardian Model. Thirdly, case study of Balassa (1963) points out the bilateral trade from UK and US to the third markets. Different with Stern and MacDougall, he relative both labor cost and productivity as explanatory variable. With the bilateral trade, there are three characteristics: speed fast, huger scope and sustainable sequencing. With the Song (1996) points out, there are some problem between the Balassa studies, which is the transportation cost and the tariffs. Under the developing countries, there are huge different between the tariffs and transportation cost. The only way is to fix the free trade strategy to bilateral trade. tariffs and transportation cost are ag ainst the assumption of Ricardian Model. With the bilateral trade, Balassa chose the data from 1950 to post 1970. As the results, this is also can prove the prediction of Ricardian Model. Although the bilateral trade is following the comparative advantage, this paper would use the overall export ratio of Stephen (2000) as in MacDougall and Stern. The radio is exports to third markets. Stehen choose 39 manufacturing sectors from 1970 to 1990. He got the database from OECD Structural Analysis Industrial (STAN) and Bilateral Trade (BT). Figure one and two are showed. He collected the purchasing-power-parity (PPPs) exchange rate. There are three PPPs shows on second Figure, frist is common PPPs, Second is sector-specific final expenditure PPPs from ICP, and last is sector-specific manufacturing PPPs from ICOP projects. (Stephen S.G ,2000).

History 7a Mid- Term Essay

The Era of Exploration witnessed the rapid political, economic, and social intrusion of Europe into the New World. Between the 15th and 17th Centuries several countries influenced the developement of the Americas. Select the most successful and infleuntial colony and compare it with another European Colonial structure. Be sure to include historical themes in your written argument. 3. The key to the colonial, structure of the United States in firmly established in 17th Century England. In reality, the foudation of the United States is a reflection of this country. Trace the economic/political/cultural influences of Britain on our colonial structure. In your a nswer include important individuals, governmental structures,events, social policies and historical themes. 4. Analzye and contrast the historical development of the Southern Colonies 1603- 1783. In your answer, include historical themes, reasons for colonial impementation, regional development, economic structure, religious importance or lack of it, the instittution of Slavery and the ramifications of these colnies on the development of the United States. 5. New England is the mother culture of Modern United States. Analyze thsis statement by describing the Colonial Foudation of, Massachusetts, Rhode Island, Connecticut and New Hampshire 1620-1783. How have their histories infleunced the development of contemporary United States? How have these areas impacted our society’s

What Every Body Is Saying About Arguement Essay Topics for Kids Is Dead Wrong and Why

What Every Body Is Saying About Arguement Essay Topics for Kids Is Dead Wrong and Why Children need to be able to use cellphones in school. Kids should have the ability to vote. Parents should speak to kids about drugs at a youthful age. The school day ought to be shorter. The Arguement Essay Topics for Kids Stories There are invariably a vast range of opinions on the topic of technology, and here are our favourite things to consider on the subject. Inspiration to make your own advertising or media argumentative essay topics isn't difficult to discover. However, learning how to utilize it in creating fun essay topics is something which will quickly catapult your grades. Advertising and the media are now nearly inseparable from society for a whole. Odds are, all you have to do is relax and locate a topic you're passionate about and, obviously, one that's debatable. Some individuals may think that the superior content could be written on any topic and the paper success is dependent just on the mastery of the writer. If you are a newcomer to writing informative essays or simply struggle when it has to do with thinking of informative essay topics, then there's an excellent chance you may be searching for some help. When it has to do with writing an argumentative essay, the main matter to do is to select a topic and an argument that you may really get behind. When prior brainstorming is finished, you might begin drafting your essay. Why it's not so bad to be homeless. Academic papers cannot contain any signals of plagiarism. There are a couple basic guidelines to follow to be able to be in a position to compose a great persuasive essay. If you discover that the writer did not provide precisely what you expected, request a re vision, and we'll make the corrections. You might also get in touch with your writer to supply some excess recommendations or request information regarding the order's progress. Writing a great persuasive essay is not a simple job, however, it's achievable. You are a genuine expert in regards to persuasive essay topics. Although you may know what format, style guide, and whether the essay ought to be double spaced, you might be confused on what actually creates a superior essay topic. Do not neglect to polish your essay. Figure out how funny argumentative essay topics can receive the interest of your tutor. Moral argumentative essay topics are a few of the simplest to get carried away with. An argumentative essay is a certain sort of academic writing. It requires you to decide on a topic and take a position on it. Try to remember that, exactly like with any other paper, there's a particular structure of a persuasive essay that you should follow. There's a service which may help decent essay topics narrative you. Taking into account that lots of persuasive essays concern controversial topics, before writing, you might want to sit down and think of what your opinion on the topic actually is. Recent argumentative essay topics that are related to society is going to do. There are a couple rules which are critical. When you're picking your topic, bear in mind that it's much simpler to write about something which you currently have interest ineven in case you don't know a great deal about it. There are a lot of things to argue when it has to do with the law. The issue is that everybody's interpretation of what makes a great society differs. The Fundamentals of Arguement Essay Topics for Kids Revealed It doesn't make a difference to us, whether you're too busy on the job concentrating on a p assion undertaking, or simply tired of a seemingly infinite stream of assignments. It's important to select debatable argumentative essay topics since you need opposing points you can counter to your own points. The procedure for grading student papers can be a really boring one. Standardized and state tests assess each of the incorrect abilities and the significance set on testing leaves a negative effect on both students and teachers. The Downside Risk of Arguement Essay Topics for Kids Persuasive writing is just one of the most complicated academic tasks. Argumentative writings is a particular sort of a paper. Start researching, and get started writing! The most frequently encountered paper writing service that the majority of our clients require is essay writing. Our customer support will gladly tell you whether there are any special offers at the present time, and make sure you are getting the very best service our business can deliver. Use the aid of true academic ex perts and receive the service you have earned! The service normally has a group of professional writers in various subjects, so you'll be in a position to get the one which you will need.

Jacques Le Goff s The Imaginary World - 1582 Words

Jacques le Goff, the most renowned French medievalist, proclaimed in an interview for the journal L Express in 2005 that â€Å"les hommes et les femmes d une socià ©tà © vivent et pensent autant par l image et l imagination que par le contact avec la rà ©alità © et la raison† (Men and women of a society live and think just as much through images as by contact with reality and reason). That s why, in my opinion, studying the imaginary world is so important, indeed, it is about telling the story of what makes people think, act and feel and since knights are a big part of this world, it seems to be the perfect subject to get a good understanding of the fantasy world. Litterature, works of art, architecture, sculptures, miniature illustrations are all†¦show more content†¦There is, of course, a moral function fulfilled by these images, they tend to give an example, but they are not perfect for all that, since the marvelous world is connected to the daily one, everythi ng remains humanly comprehensible, yet nothing human could be perfect. That s why criticisms are not absent from these tales, especially on knights behaviours. It is just a proof of their primacy, they are an model which, like any human thing, must be perfected. I will argue that, despite these criticisms, the content of the imaginary world in its multiple forms tends to have a tangible impact on knighthood, for instance, real knights trying to behave like exemplary ones, to the extent that the boundary between myth and daily world became even thinner. I will not discuss whether these depictions were totally effective or not into modifying a conduct, this question would require a far longer work, the important thing is that it was their aim, so the creators of the imaginary world thought they could effectively change the world, a necessary change in the light of the impact of knights on society. Moreover, some historical figures actually tried to follow their advice and benefited from the myths. Finally, some concepts arised on the border of the two worlds and demonstrate how compatible they were. Knighthood is an essential order of the medieval society. Therefore, it is not surprising that such a central figure is