Explain the meaning of the Stolper-Samuelson Theorem and how international trade affects the distribution of income.
Stolper-Samuelson Theorem is a corollary to hecksher-ohlin theory:
It states that international trade will result in equalization in the relative and absolute income of factors across nations.
Suppose Nation 1 specialises in the production of labour intensive product say x. Then due to increase in production demand of labour will rise, this will cause wages of the labours to rise. At the same time making relative demand of capital to fall, causing interest rates to fall.
Effect of trade on the distribution of income:
The real income of factors move in the same direction as the movement in factor prices.
Now Nation 1 is labour intensive so, trade tends to increase the wages of labours and reduce the real income of the owners of capital.
Explain the meaning of the Stolper-Samuelson Theorem and how international trade affects the distribution of income.
51. The Stolper-Samuelson theorem suggests that, when a country is opened to international trade, the real income of the country's abundant factor of production will and the real income of the country's scarce factor of production a. rise; also will rise b. rise; wil fall c. fall; will rise d. fall; also will fall 52 In the "specific-factors" model where capital in each sector is fixed but labor can move freely between the two sectors, the opening of the country...
State the Stolper-Samuelson Theorem, and explain what it means. Use a diagram to demonstrate its main result. What is the reason for the Stolper-Samuelson result? What are the effects of trade upon the returns to capital and labor?
According to the Stolper-Samuelson theorem, if a country opens up to trade and starts to export a product made relatively intensively with labor, does the labor intensity of production of that relatively labor-intensive product rise, fall or stay the same in that country? What happens to the labor intensity of production of the other product, which is made relatively intensively with capital? Why?
What is the outcome of the Stolper-Samuelson Theorem??? Account for lessons derived and offer appropriate policy recommendations.
Part I. Heckscher-Ohlin Model and Stolper-Samuelson theorem Suppose that there are drastic technological improvements in shoe production at Home such that shoe factories can operate almost completely with computer-aided machines. Consider the following data for the Home country 1. Computers: Sales revenue Pc X Qc-100 Payments to labor = w × LC-50 Payments to capital - Kc R 50 Percentage increase in the price-pe_0% Sales revenue Ps X Qs-100 Payments to labor -WxLS-5 Payments to capital -Ks x R 95...
As a result of the North American Free Trade Agreement (NAFTA), the United States and Canada shifted toward free trade with Mexico. According to the Stolper–Samuelson theorem, how did this shift affect the real wage of unskilled labor in Mexico? In the United States or Canada? How did it affect the real wage of skilled labor in Mexico? In the United States or Canada? Please No bad handwriting. I need to understand it. Thanks!
4. The income distribution effects in the specific factors and H (a) Explain the effect international trade on income distribution predicted by the specific factors model Your explanation should be in most general terms, that is, not in terms of cloth and food or labor and capital but in the terms used by the specific factors model mobile factor and specific factor. (b) In a similar fashion, explain the effect international trade on income distribution predicted by the Heckscher-Ohlin model....
Explain in 2-3 paragraphs how the trade war between the US and china affects consumers in the long run, who you think is winning, and how this affects the global market.
Explain how and why letters of credit and other trade documents are used in an international trade transaction. IN A 1 PAGE RESPONSE PLEASE
“The study of international trade and international migration occupies a relatively small part of standard economic analysis. Conventionally, international trade theory tends to ignore international migration, which essentially changes the distribution of national communities. Similarly, the literature on international migration abstracts from the effects of labor migration on international flows of goods, services and capital.” Using elements from international trade and international migration theory, explain how an increase in trade between a developed and a developing economy may affect migration...