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International Trade Theory
International trade theory is a sub-field of economics which analyzes the patterns of international trade, its origins, and its welfare implications. International trade policy has been highly controversial since the 18th century. International trade theory and economics itself have developed as means to evaluate the effects of trade policies. Adam Smith's model Adam Smith describes trade taking place as a result of countries having absolute advantage in production of particular goods, relative to each other. Within Adam Smith's framework, absolute advantage refers to the instance where one country can produce a unit of a good with less labor than another country. In Book IV of his major work ''the Wealth of Nations'', Adam Smith, discussing gains from trade, provides a literary model for absolute advantage based upon the example of growing grapes from Scotland. He makes the argument that while it is possible to grow grapes and produce wine in Scotland, the investment in the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economics
Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interactions of Agent (economics), economic agents and how economy, economies work. Microeconomics analyses what is viewed as basic elements within economy, economies, including individual agents and market (economics), markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyses economies as systems where production, distribution, consumption, savings, and Expenditure, investment expenditure interact; and the factors of production affecting them, such as: Labour (human activity), labour, Capital (economics), capital, Land (economics), land, and Entrepreneurship, enterprise, inflation, economic growth, and public policies that impact gloss ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Eli Heckscher
Eli Filip Heckscher (24 November 1879 – 23 December 1952) was a Swedish political economist and economic historian who was a professor at the Stockholm School of Economics. He is known for the Heckscher–Ohlin theorem, an influential model of international trade that predicts that capital-abundant countries export capital-intensive goods, while labor-abundant countries export the labor-intensive goods. Biography Heckscher was born in Stockholm, son of the Jewish Danish-born businessman Isidor Heckscher and his spouse Rosa Meyer, and completed his secondary education there in 1896. He conducted higher studies at Uppsala University (from 1897) and Gothenburg University College (in 1898), completing his PhD in Uppsala in 1907. He was professor of Political economy and Statistics at the Stockholm School of Economics from 1909 until 1919, when he exchanged that chair for a research professorship in economic history, finally retiring as emeritus professor in 1945. In 1929 Hecksche ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Home-market Effect
The home market effect is a hypothesized concentration of certain industries in large markets. The home market effect became part of New Trade Theory. Through trade theory, the home market effect is derived from models with returns to scale and transportation costs. When it is cheaper for an industry to operate in a single country because of returns to scale, an industry will base itself in the country where most of its products are consumed in order to minimize transportation costs. The home market effect implies a link between market size and exports that is not accounted for in trade models based solely on comparative advantage. The home market effect was first proposed by Corden and was developed by Paul Krugman in a 1980 article. Krugman sought to provide an alternative to the Linder hypothesis. Based on recent research, the home market effect confirms Linder's sentiment that a nation's demand is a predicate for its exports, but does not support Linder's claim that differenc ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Returns To Scale
In economics, the concept of returns to scale arises in the context of a firm's production function. It explains the long-run linkage of increase in output (production) relative to associated increases in the inputs (factors of production). In the long run, all factors of production are variable and subject to change in response to a given increase in production scale. In other words, returns to scale analysis is a long-term theory because a company can only change the scale of production in the long run by changing factors of production, such as building new facilities, investing in new machinery, or improving technology. There are three possible types of returns to scale: * If output increases by the same proportional change as all inputs change then there are constant returns to scale (CRS). For example, when inputs (labor and capital) increase by 100%, output increases by 100%. * If output increases by less than the proportional change in all inputs, there are decreasing retu ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Monopolistic Competition
Monopolistic competition is a type of imperfect competition such that there are many producers competing against each other but selling products that are differentiated from one another (e.g., branding, quality) and hence not perfect substitutes. For monopolistic competition, a company takes the prices charged by its rivals as given and ignores the effect of its own prices on the prices of other companies. If this happens in the presence of a coercive government, monopolistic competition make evolve into government-granted monopoly. Unlike perfect competition, the company may maintain spare capacity. Models of monopolistic competition are often used to model industries. Textbook examples of industries with market structures similar to monopolistic competition include restaurants, cereals, clothing, shoes, and service industries in large cities. The earliest developer of the theory of monopolistic competition is Edward Hastings Chamberlin, who wrote a pioneering book on t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Foreign Direct Investment
A foreign direct investment (FDI) is an ownership stake in a company, made by a foreign investor, company, or government from another country. More specifically, it describes a controlling ownership an asset in one country by an entity based in another country. The magnitude and extent of control, therefore, distinguishes it from a foreign portfolio investment or foreign indirect investment. Foreign direct investment includes expanding operations or purchasing a company in the target country. Definitions Broadly, foreign direct investment includes mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations, and intra company loans. In a narrow sense, foreign direct investment refers just to building new facility, and a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor. FDI is the sum of equity capital, long-term capital, and short-term capital as ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Leontief's Paradox
In economics, the Leontief's paradox is that a country with a higher capital per worker has a ''lower'' capital/labor ratio in exports than in imports. This econometric finding was the result of Wassily W. Leontief's attempt to test the Heckscher–Ohlin theory ("H–O theory") empirically. In 1953, Leontief found that the United States—the most capital-abundant country in the world—exported commodities that were more labor-intensive than capital-intensive, contrary to H–O theory. Leontief inferred from this result that the U.S. should adapt its competitive policy to match its economic realities. Measurements * In 1971 Robert Baldwin showed that U.S. imports were 27% more capital-intensive than U.S. exports in the 1962 trade data, using a measure similar to Leontief's. * In 1980 Edward Leamer questioned Leontief's original methodology for comparing factor contents of an equal dollar value of imports and exports (i.e. on real exchange rate grounds). However, he ackno ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Wassily Leontief
Wassily Wassilyevich Leontief (; August 5, 1905 – February 5, 1999) was a Soviet-American economist known for his research on input–output analysis and how changes in one economic sector may affect other sectors. Leontief won the Nobel Memorial Prize in Economic Sciences in 1973, and four of his doctoral students have also been awarded the prize (Paul Samuelson 1970, Robert Solow 1987, Vernon L. Smith 2002, Thomas Schelling 2005). Biography Early life Wassily Leontief was born on August 5, 1905, in Munich, German Empire, the son of Wassily W. Leontief (professor of Economics) and Zlata (German spelling ''Slata''; later Evgenia) Leontief (née Becker). Wassily Leontief Sr. belonged to a family of Russian old-believer merchants living in St. Petersburg since 1741. Evgenia (Genya) Becker belonged to a wealthy Jewish family from Odessa. At 15 in 1921, Wassily Jr. entered Petrograd State University in present-day St. Petersburg. He earned his Learned Economist degree (equiv ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Taste (sociology)
In aesthetics, the concept of taste has been the interest of philosophers such as Plato, Hume, and Kant. It is defined by the ability to make valid judgments about an object's aesthetic value. However, these judgments are deficient in objectivity, creating the 'paradox of taste'. The term 'taste' is used because these judgments are similarly made when one physically tastes food. Hume, Kant and Bourdieu David Hume addressed the subject of aesthetic taste in an essay entitled “Of the Standard of Taste”, one of four essays published in his '' Four Dissertations'' in 1757. "Of the Standard of Taste" is highly regarded for its insights into aesthetics. While Hume is generally seen as an empiricist, in matters of taste, he can be classified as an ideal observer theorist, allowing for individual and cultural preferences. Hume distinguishes between sentiments, always correct as they reference only themselves, and determinations, which can be incorrect as they refer to somethin ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Factor Prices
In economic theory, a factor price is the unit cost of using a factor of production, such as labor or physical capital. There has been much debate as to what determines factor prices. Classical and Marxist economists argue that factor prices decided the value of a product and therefore the value is intrinsic within the product. For this reason, the term natural price is often used instead. Marginalist economists argue that the factor price is a function of the demand for the final product, and so they are imputed from the finished product. The theory of imputation was first expounded by the Austrian economist Friedrich von Wieser. See also * Economic theory * Economics * Factors of production * Inflation In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ... References Prod ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Good (economics)
In economics, goods are anything that is good, usually in the sense that it provides well-being, welfare or utility to someone.Alan V. Deardorff, 2006. ''Terms Of Trade: Glossary of International Economics'', World Scientific. Online version: Deardorffs' Glossary of International Economics"good" an Goods can be contrasted with bads, i.e. things that provide negative value for users, like chore division, chores or waste. A bad lowers a consumer's overall welfare. Economics focuses on the study of economic goods, i.e. goods that are scarce; in other words, producing the good requires expending effort or resources. Economic goods contrast with free goods such as air, for which there is an unlimited supply.Samuelson, P. Anthony., Samuelson, W. (1980). Economics. 11th ed. / New York: McGraw-Hill. Goods are the result of the Secondary sector of the economy which involves the transformation of raw materials or intermediate goods into goods. Utility and characteristics of goods The c ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
