国际经济学第九版英文课后答案 第7单元

Instructor’s Manual

CHAPTER 7

ECONOMIC GROWTH AND INTERNATIONAL TRADE

OUTLINE

7.1 Introduction

7.2 Growth of Factors of Production

7.2a Labor Growth and Capital Accumulation Over Time

7.2b The Rybczynski Theorem

7.3 Technical Progress

7.3a Neutral, Labor-Saving, and Capital-Saving Technical Progress

7.3b Technical Progress and the Nation's Production Frontier

Case Study 7-1: Changes in Relative Resource Endowments of Various Countries and Regions

Case Study 7-2: Change in Capital-Labor Rations in Selected Countries

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7.4 Growth and Trade: The Small Country Case

7.4a The Effects of Growth on Trade

7.4b Illustration of Factor Growth, Trade, and Welfare

7.4c Technical Progress, Trade, and Welfare

Case Study 7-3: Growth of Output per Worker from Capital Deepening, Technological Change, and Improvements in Efficiency

7.5 Growth and Trade: The Large-Country Case

7.5a Growth and the Nation's Terms of Trade and Welfare

7.5b Immiserizing Growth

7.5c Illustration of Beneficial Growth and Trade

Case Study 7-4: Growth, Trade, and the Giants of the Future 7.6 Growth, Change in Tastes, and Trade in Both Nations

7.6a Growth and Trade in Both Nations

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7.6b Change in Tastes and Trade in Both Nations

Case Study 7-5: Change in the Revealed Comparative Advantage of Various Countries or

Regions

Case Study 7-6: Growth, Trade, and Welfare in the Leading Industrial Nations

Appendix: A7.1 Formal Proof of Rybczynski Theorem

A7.2 Growth with Factor Immobility

A7.3 Graphical Analysis of Hicksian Technical Progress

Key Terms

Comparative statics Antitrade production and consumption

Dynamic analysis Neutral production and consumption

Balanced growth Normal goods

Rybczynski theorem Inferior goods

Labor-saving technical progress Terms-of-trade effect

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Capital-saving technical progress Wealth effect

Protrade production and consumption Immiserizing growth

Lecture Guide

1. This is not a core chapter and it is one of the most challenging chapters in

international trade

theory. It is included for more advanced students and for completeness.

2. lectures.

If I were to cover this chapter, I would present two sections in each of three

Time permitting, I would, otherwise cover Sections 1 and 2, paying special attention to the

Rybczynski theorem.

Answer to Problems

1.

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a) See Figure 1.

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b) See Figure 2

c) See Figure 3.

2. See Figure 4.

3. a) See Figure 5.

b) See Figure 6.

c) See Figure 7.

4. Compare Figure 5 to Figure 1.

Compare Figure 6 to Figure 3. Note that the two production frontiers have the same vertical

or Y intercept in Figure 6 but a different vertical or Y intercept in Figure 3.

Compare Figure 7 to Figure 2. Note that the two production frontiers have the same

horizontal or X intercept in Figure 7 but a different horizontal or X intercept in Figure 2.

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5. See Figure 8 on page 66.

6. See Figure 9.

7. See Figure 10.

8. See Figure 11.

9. See Figure 12.

10. See Figure 13 on page 67.

11. See Figure 14.

12. See Figure 15.

13. The United States has become the most competitive economy in the world

since the early

1990’s while the data in Table 7.3 refers to the 1965-1990 period.

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14.

The data in Table 7.4 seem to indicate that China had a comparative

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advantage in capital-intensive commodities and a comparative disadvantage

intensive commodities in 1973. This was very likely due to

in unskilled-labor

the many trade restrictions and subsidies, which distorted the comparative advantage of China. Its

true comparative advantage became evident by 1993

after China had started to liberalize its economy.

App. 1a. See Figure 16.

the new we must

1b. For production and consumption to actually occur at

equilibrium point after the doubling of K in Nation 2, assume either than commodity X is inferior or that

small to affect the relative commodity prices

Nation 2 is too at which it trades.

1c. Px/Py must rise (i.e., Py/Px must fall) as a result of

growth only.

Px/Py will fall even more with trade.

1. If the supply of capital increases in Nation 1 in the production of commodity Y

only, the VMPLy curve shifts up, and w rises in both industries. Some

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labor shifts

to the production of Y, the output of Y rises and the output of X falls, r falls, and

Px/Py is likely to rise.

2. Capital investments tend to increase real wages because they raise the K/L ratio and the productivity of labor. Technical progress tends to increase K/L and real wages if it is L-saving and to reduce K/L and real wages if it is K-saving.

Multiple-Choice Questions

1. Dynamic factors in trade theory refer to changes in:

a. factor endowments

b. technology

c. tastes

*d. all of the above

2. Doubling the amount of L and K under constant returns to scale:

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a. doubles the output of the L-intensive commodity

b. doubles the output of the K-intensive commodity

c. leaves the shape of the production frontier unchanged

*d. all of the above.

3. Doubling only the amount of L available under constant returns to scale:

a. less than doubles the output of the L-intensive commodity

*b. more than doubles the output of the L-intensive commodity

c. doubles the output of the K-intensive commodity

d. leaves the output of the K-intensive commodity unchanged

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4. The Rybczynski theorem postulates that doubling L at constant relative commodity prices:

a. doubles the output of the L-intensive commodity

*b. reduces the output of the K-intensive commodity

c. increases the output of both commodities

d. any of the above

5. Doubling L is likely to:

a. increases the relative price of the L-intensive commodity

b. reduces the relative price of the K-intensive commodity

*c. reduces the relative price of the L-intensive commodity

d. any of the above

6. Technical progress that increases the productivity of L proportionately

more than the

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productivity of K is called:

*a. capital saving

b. labor saving

c. neutral

d. any of the above

7. A 50 percent productivity increase in the production of commodity Y:

a. increases the output of commodity Y by 50 percent

b. does not affect the output of X

c. shifts the production frontier in the Y direction only

*d. any of the above

8. Doubling L with trade in a small L-abundant nation:

*a. reduces the nation's social welfare

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b. reduces the nation's terms of trade

c. reduces the volume of trade

d. all of the above

9. Doubling L with trade in a large L-abundant nation:

a. reduces the nation's social welfare

b. reduces the nation's terms of trade

c. reduces the volume of trade

*d. all of the above

10. If, at unchanged terms of trade, a nation wants to trade more after

growth, then the

nation's terms of trade can be expected to:

*a. deteriorate

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b. improve

c. remain unchanged

d. any of the above

11. A proportionately greater increase in the nation's supply of labor than

of capital is likely

to result in a deterioration in the nation's terms of trade if the nation exports:

a. the K-intensive commodity

*b. the L-intensive commodity

c. either commodity

d. both commodities

12. Technical progress in the nation's export commodity:

*a. may reduce the nation's welfare

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b. will reduce the nation's welfare

c. will increase the nation's welfare

d. leaves the nation's welfare unchanged

13. Doubling K with trade in a large L-abundant nation:

a. increases the nation's welfare

b. improves the nation's terms of trade

c. reduces the volume of trade

*d. all of the above

14. An increase in tastes for the import commodity in both nations:

a. reduces the volume of trade

*b. increases the volume of trade

c. leaves the volume of trade unchanged

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d. any of the above

15. An increase in tastes of the import commodity of Nation A and export in B:

*a. will reduce the terms of trade of Nation A

b. will increase the terms of trade of Nation A

c. will reduce the terms of trade of Nation B

d. any of the above

ADDITIONAL ESSAYS AND PROBLEMS FOR PART ONE

1. Assume that both the United States and Germany produce beef and

computer chips with the following costs:

United States Germany

(dollars) (marks)

Unit cost of beef (B) 2 8

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Unit cost of computer chips (C) 1 2

a) What is the opportunity cost of beef (B) and computer chips (C) in each country?

b) In which commodity does the United States have a comparative cost advantage?

What about Germany?

c) What is the range for mutually beneficial trade between the United States and Germany for each computer chip traded?

d) How much would the United States and Germany gain if 1 unit of beef is exchanged for 3 chips?

Ans. a) In the United States:

the opportunity cost of one unit of beef is 2 chips;

the opportunity cost of one chip is 1/2 unit of beef.

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the opportunity cost of one unit of beef is 4 chips;

the opportunity cost of one chip is 1/4 unit of beef.

b) The United States has a comparative cost advantage in beef with respect to

Germany, while Germany has a comparative cost advantage in computer

chips.

c) The range for mutually beneficial trade between the United States and Germany for each unit of beef that the United States exports is

2C < 1B < 4C

d) Both the United States and Germany would gain 1 chip for each

traded.

unit of beef

2. Given: (1) two nations (1 and 2) which have the same technology but (4560623702.doc) 7-21 Dominick Salvatore

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different factor endowments and tastes, (2) two commodities (X and Y) produced under increasing costs conditions, and (3) no transportation costs, tariffs, or other obstructions to trade. Prove geometrically that mutually advantageous trade between the two nations is possible.

Note: Your answer should show the autarky (no-trade) and free-trade points

of production and consumption for each nation, the gains from

and express the equilibrium condition that should expanding.)

trade of each nation, prevail when trade stops

Ans.: See Figure 1 on page 74. Nations 1 and 2 have different production possibilities curves and

different community indifference maps. With these, they will usually end up with different relative commodity prices in autarky, thus making mutually beneficial trade possible.

In the figure, Nation 1 produces and consumes at point A and

Px/Py=PA in autarky,

while Nation 2 produces and consumes at point A' and Px/Py=PA'.

Since PA < PA',

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Nation 1 has a comparative advantage in X and Nation 2 in Y.

Specialization in

production proceeds until point B in Nation 1 and point B' in Nation 2,

at which PB=PB' and the quantity supplied for export of each commodity exactly equals the quantity demanded for import. Thus, Nation 1 starts at point A in production and consumption in autarky, moves to point B in production, and by exchanging BC of

X for CE of Y reaches point E in consumption. E > A since it

X and Y and lies on a higher community indifference

production and consumption in autarky, moves

involves more of both

curve. Nation 2 starts at A' in

to point B' in production, and by exchanging B'C' of Y for C'E' of X reaches point E'in consumption (which exceeds

A').

At Px/Py=PB=PB', Nation 1 wants to export BC of X for CE of Y, while

Nation 2 wants to export B'C' (=CE) of Y for C'E' (=BC) of X. Thus, PB=PB' is the

equilibrium relative commodity price because it clears both (the X and Y)

markets.

3. Draw a figure showing: (1) in Panel A a nation's demand and supply

traded commodity and the nation's excess supply of the

curve for A

commodity, (2) in Panel C the trade partner's demand and supply curve for the same traded commodity and its excess demand for the commodity, and (3) in Panel B the supply and demand for the

quantity traded of the commodity,

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its equilibrium price, and why a price above or below the equilibrium price will

change to P2.

not persist. At any other price, QD  QS, and P will

Ans. See Figure 2 on page 74.

The equilibrium relative commodity price for commodity X (the traded

commodity

exported by Nation 1 and imported by Nation 2) is P2 and the equilibrium quantity

of commodity X traded is Q2.

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4. nations.

a) Identify the conditions that may give rise to trade between two

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b) What are some of the assumptions on which the Heckscher-Ohlin theory is

based?

c) What does this theory say about the pattern of trade and effect of trade on factor

prices?

Ans. a) Trade can be based on a difference in factor endowments, technology, or tastes

between two nations. A difference either in factor

in a different production possibilities

endowments or technology results

frontier for each nation, which, unless neutralized by a difference in tastes, leads to a difference in relative commodity price

and mutually beneficial trade. If two nations face increasing costs and have identical production possibilities frontiers but different tastes, there will also be a difference in relative commodity prices and the basis for mutually beneficial trade between the

two nations. The difference in relative commodity prices is

then translated into a difference in absolute commodity prices between the two nations, which is the immediate cause of trade.

b) The Heckscher-Ohlin theory (sometimes referred to as the modern

theory – as

opposed to the classical theory - of international trade) assumes that

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nations have the same tastes, use the same technology, face constant returns

to scale (i.e., a given percentage increase in all inputs increases output by the same percentage) but differ the face of identical tastes or

widely in factor endowments. It also says that in demand conditions, this difference in factor

relative

endowments will result in a difference in factor prices between

nations, which in turn leads to a difference in relative commodity prices and trade. Thus, in the Heckscher-Ohlin theory, the international difference in supply conditions alone determines the pattern of trade. To be noted is that the two nations need not be identical in other respects in order for international trade to be based primarily on the difference in their factor endowments.

c) The Heckscher-Ohlin theorem postulates that each nation will export the

commodity intensive in its relatively abundant and cheap factor and import

the commodity intensive in its relatively scarce and expensive factor. As an important corollary, it adds that under highly restrictive assumptions, trade will completely

eliminate the pretrade relative and absolute differences in the

factors among nations. Under less restrictive and

price of homogeneous

more usual conditions, however, trade will reduce, but not eliminate, the pretrade differences in relative and absolute

factor prices among nations. In

any event, the Heckscher-Ohlin theory does say something very useful on how trade affects factor prices and the distribution of income in each nation. Classical economists were practically silent on this point.

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5. consumers demand more of commodity X (the L-intensive commodity)

commodity Y (the K- intensive commodity). Suppose that Nation

is textiles, and commodity Y is food. Starting from the

and less of

1 is India, commodity X

no-trade equilibrium position and using the Heckscher-Ohlin model, trace the effect of this change in tastes on India's

(a) relative commodity prices and demand for food and textiles,

(b) production of both commodities and factor prices, and

(c) comparative advantage and volume of trade.

(d) Do you expect international trade to lead to the complete equalization of

relative commodity and factor prices between India and the

Why?

United States?

Ans. textile axis in

a. The change in tastes can be visualized by a shift toward the

India's indifference map in such a way that an

to the steeper segment of India's

opportunity costs) after

the

pretrade

indifference curve is tangent

production frontier (because of increasing

the increase in demand for textiles. This will cause relative commodity price of textiles to rise in India.

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b. The increase in the relative price of textiles will lead domestic

producers in India to shift labor and capital from the production of

the production of textiles. Since textiles are L-intensive in

the demand for labor and therefore the wage rate will

same time, as the demand for food falls, the

of capital will fall. With labor

producers in India will

textiles and food.

food to

relation to food, rise in India. At the

demand for and thus the price becoming relative more expensive,

substitute capital for labor in the production of both

Even with the rise in relative wages and in the relative price of textiles,

India still remains the L-abundant and low-wage nation with respect

nation such as the United States. However, the pretrade

relative price of textiles between India and the somewhat smaller than before the change in

volume of trade required to equalize

factor prices is smaller than

smaller

quantity

price

of of the

to a

difference in the

United States is now

tastes in India. As a result the

relative commodity prices and hence before. That is, India need now export a

textiles and import less food than before for the relative

textiles in India and the United States to be equalized. Similarly,

gap between real wages and between India and the United States is

a

now smaller and can be more quickly and easily closed (i.e., with smaller volume of trade).

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c. Since many of the assumptions required for the complete equalization of

relative commodity and factor prices do not hold in the real

differences can be expected and do in fact remain

India and the United States. Nevertheless,

differences, and the H-O model

considered to analyze the

absolute

world, great

between real wages in

trade would tend to reduce these

does identify the forces that must be

effect of trade on the differences in the relative and

commodity and factor prices between India and the United States.

5. extended.

(a) Explain why the Heckscher-Ohlin trade model needs to be

(b) Indicate in what important ways the Heckscher-Ohlin trade model can be

extended.

(c) Explain what is meant by differentiated products and intra-industry trade.

Ans. (a) The Heckscher-Ohlin trade model needs to be extended because, while generally correct, it fails to explain a significant portion of international trade, particularly the trade in manufactured products among industrial nations.

(b) The international trade left unexplained by the basic Heckscher-Ohlin trade mode can be explained by

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(1) economies of scale,

(2) intra-industry trade, and

(3) trade based on imitation gaps and product differentiation.

(c) Differentiated products refer to similar, but not identical, products (such as cars,

typewriters, cigarettes, soaps, and so on) produced by the same industry or broad

product group. Intra-industry trade refers to the international trade in differentiated

products.

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