A hybrid production structure in trade: theory and implications |
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Authors: | Gouranga Gopal Das |
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Institution: | (1) Department of Economics, Hanyang University, 1271 Sa-1 Dong, Ansan, Kyunggi-Do, 426-791, South Korea |
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Abstract: | In models of pure theory of international trade, no unique production structure is dominant. By grafting a specific factor
structure onto a Heckscher–Ohlin framework, in a hybrid general equilibrium production model, this paper presents theoretical
results with implications such as: (a) the relative price increase of a traded goods sector might have expansionary or contractionary
output effect depending on factor intensities; (b) uniform primary-factor augmenting technical progress in the intermediate
inputs sector might lead to a decline in the output of one of the sectors; (c) favorable relative price effect in one sector
will lead to a drop in the return to the specific capital type depending on the grafted production structure. The proposed
framework is useful for explaining stylized facts related to wage inequality, deindustrialization and export-processing, which
have a great policy relevance for trade and development. |
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Keywords: | |
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