At 09:09 AM 4/24/01 -0700, you wrote:
>In _For the Common Good_ , Cobbs and ______ state that factor mobility
>(especially of capital) cannot be incorporated in the theory of
>comparative advantage. Is this correct? I seem to recall someone on this
>list stating otherwise.
Take a standard Ricardian comparative costs example. Portugal has an
absolute disadvantage whereas England has an absolute advantage. However,
goes the story, P can gain from trade with E! (Then a lot of people assume
that P _will_ gain from trade with E, but that doesn't follow. All the
example says is that gains are possible, because world production rises.)
Anyway, if you examine the technology numbers, it turns out that the world
gain in production from _labor mobility_ from P to E is even larger
(assuming that E's productivity doesn't change when P workers move there).
Alternatively, if E's technology is moved to P via direct investment, that
would also raise world production more than international trade does. Even
better, the P folks could steal E's technology, which makes it more likely
that they'll benefit from the technology transfer.
I'll leave other models of trade for others to discuss.
>Can you suggest a textbook or article that takes up this issue, and that
>quickly summarizes various other trade theories (e.g. 'new' trade theory)?
>I'm filling in for an absent colleague in a second year class discussion
>where these issues may come up.
Anwar Shaikh has a good article. I'll have to look for a book. I'd like to
hear others' answers.
Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
