Provide a detailed explanation for how the Heckscher-Ohlin theory differs from the Ricardian model
Provide a detailed explanation for how the Heckscher-Ohlin theory differs from the Ricardian model of Unit II. The Heckscher–Ohlin model is a general equilibrium mathematical model of international trade, developed by two economists Eli Heckscher and Bertil Ohlin. It builds on David Ricardo's theory of comparative advantage by predicting patterns of commerce and production based on the factor endowments of a trading region. The model essentially says that countries will export products that utilize their abundant and cheap factors of production and import products that utilize the countries' scarce factors. However, it is more notable in the Heckscher-Olin model may be the assumption that capital cannot move from nation to nation. That assumption is a key to several consequences. Yet, in today global economy, capital is extremely changeable across national borders. Because of this information, whether it may be better to work with a model that includes labor as the only immobile element of production. To explain a little more technically, assume that an industry has production function: Y = F (K,L). And assume that the marginal product of capital is influenced by the world rental cost of capital R: FK(K,L) = R. Then with these two equations, we can eliminate K and solve for output as a function of L (and R, which a nation takes as given). If F is homogeneous of degree one
Why are developing countries at a disadvantage?
It is clear that competition and free trade are essential for a healthier world economy and that the WTO's agenda has good intentions. However, critics argue that while globalisation has the potential to become a positive force for economic growth, too many of the benefits go to well off countries while the cost of adjusting markets and implementing agreements are having to be endured by millions of already poor workers within developing countries. (Jose Bove - The OCED Observer 2001) The cost of simply implementing its agreements can sometimes take up an entire years development budget for many of these nations, which would seem to question whether these countries are putting what little resources they have to good use. (Brett (Parris The OECD Observer; Paris; Oct 2000) Why are developing countries at a disadvantage? Firstly there is a lack of funds and skills among developing countries which are needed in order to maintain a big presence at WTO meetings. While rich countries can afford to fly in teams of trained lawyers, many 3rd world nations lack the resources needed to ensure that they are represented at WTO proceedings. (Consumers International - Aug 1999) Also when they do manage to represent themselves at the meetings they are still very much at a disadvantage. All trade negotiations are based on the principle of reciprocity and this kind of bartering, for the
Summary of "'Global Economic Governance after the Crisis: The G2, the G20, and Global Imbalances.' Bank of Korea Working Paper, 2011
Walter, Andrew. 'Global Economic Governance after the Crisis: The G2, the G20, and Global Imbalances.' Bank of Korea Working Paper, 2011 Main Argument Walter starts off by introducing the three views in how people are predicting the global economic system will change. In that the system will involve either, greater representation, less representation, or a mixed representation. In addition Walter details the conflict between the US and China, both in an effort to shift the burden of adjustment onto the other. Predictions Differing viewpoints on the future of the Global Economic System . Walter looks at several views on what kind of system that will be emerging at the end of this first decade. View 1: the global crisis delivered a “knockout” blow to an already weak system, and that instead of the G7 the G20 would be able to manage the government better View 2: rather than have a G7, it assumes we are moving toward a G2, being China and the US. Some project China to be a hegemon in the making which will one day over-power the US View 3: As Hank Paulson argues, “the strength of the relationship between the US and China will be critical to the functioning of the G20 and global cooperation” (Walter) China and the US and the burden of adjustment Brief History. Post WWI the UK and Germany were in debt, while the US and France were in surplus. Keynes, being the
The functions of consumer organisations.
Task 6 The functions of consumer organisations Consumer organisations may carry out on or more functions, e.g.: * Advisory: those that give advice to customers, for example Citizens Advice Bureau (CAB). * Regulatory: ensuring that organisations operate according to specific regulations, for example rail regulatory which oversees train operating companies such as Virgin. * Promotional: those involved in promoting and advertising consumer rights, such as the Office of Fair Trading. * Investigator: those that investigate reports of breaches of regulations, e.g. the Trading Standards officers. * Lobbying: those processing the government for changes in the law to further protect consumers, e.g. the Consumers' Associating. * Representation: those that represent consumer interest on committees or in consumer groups, e.g. the National Consumer Council or the Consumers' Associating, or represent consumers in court, e.g. Citizens Advice Bureau advisers. Consumer organisations The Office Of Fair Trading (OFT) The role of OFT is to: * Identify trading practises, which are against consumer interests. * Put these rights, wherever possible. * Regulate the provision of consumer credit. * Investigate and remedy activities by industry and commerce, which are against the interests of consumer (such as fixing prices or limiting the supply of an item.) The OFT produce a consumer
Chocoholics PLC Factory Floor Plan
Chocoholics PLC Factory Floor Plan Chocoholics employ 70 staff and over half of these work in the production department. From this, I can assume that there are 30 production staff, plus supervisors. As chocoholics has only 30 staff, there is a limitation to how much chocolate they can produce. The way Chocoholics currently operates is by producing chocolate on their production lines for 4 and a half days, and then the machinery is turned off and hand made chocolate is produced for half a day. This way of producing chocolate is very inefficient because for half the day, the machinery is not being used. The same applies to the area for making the hand made chocolate, as this is not used for 4 and a half days. If chocoholics were to make itself as efficient as possible then the machines should be all used at the same time and so should the area for hand made chocolates. This could be done by employing more staff. These new staff that are employed would be put on the machines as they have little experience and skills and the more skilled workers would make the handmade chocolates. Chocoholics produce its product on six different product lines, which are laid out, by product. This way of producing chocolate is dangerous, as a breakage on 1 production line will affect the whole business. If there is a reduction in 1 type of chocolate it will be very expensive to change the
Discuss why do firms want to grow and means of growth
"Discuss why do firms want to grow and means of growth" Mazin Abdel-Rahman The existence of internal economies of scale provides a major force encouraging firms to enlarge. There are different ways in which firms can grow, generally they can be described as internal and external growth. Internal growth occurs when firms use their own profits to finance an expansion of capacity. External growth occurs when firms integrate in the form of mutual agreement in the form of a merger or in the form of a takeover, where one firm acquires control of a minimum fifty-one percent of another firms equity. * Integration There are two types of integration, vertical and horizontal, vertical integration in further split into two types, backward and forward integration. Backward integration occurs when one firm integrates with another firm, which supplies input. Therefore firm (A) integrates with firm (B) which provides which provides firm (A's) raw material. Forward integration occurs when firm (A) integrates with firm (B), were firm (B) is the retail outlet of firm (A) products. Horizontal integration occurs when firm (A) integrates with firm (B), were both firms are at the same stage of production, in the same industry. Motives for vertical integration * Security When firms perform forward integration, firms safeguard their retail outlets for their products, therefore the firm
The Sino-British Dispute Over Hong Kong: A game theory interpretation.
THE SINO-BRITISH DISPUTE OVER HONG KONG: A Game Theory Interpretation1 by Ma Ngok The author reviews, in this article, the history of Sino-British negotiations over the future of Hong Kong. Sino-British negotiations had a history of volatile relations and significant twists, with significant moments in their negotiation history being 1982-1984, when China was generally acknowledged to have "won", as well as 1992-1993, when the British negotiating team was seen to have changed their negotiation tactic from one of cooperation to confrontation. In the article, the author sets out to fulfill two main objectives - to argue a detailed analytical review of Sino-British negotiations from the 1980s to the 1990s and to propose and argue for a "game theory" metaphor that provides reasons for Sino-British negotiation tactics. The "Game Theory" Metaphor The author proposes the "game theory" metaphor to represent the benefit and loss situation faced by both Great Britain and China during their negotiations from the 1980s to the 1990s. Upon explaining why both parties had a common interest in "maintaining Hong Kong as a free and prosperous city"2, the author then explains the workings of the "game theory" metaphor - DD being the worst case scenario for both parties (where a break off in negotiations could destroy Hong Kong), DC being the best scenario for both parties (where greater
The theory of constraints (TOC) can help management reduce cycle time. The TOC indicates that the flow of goods through a production process cannot be a faster rate than the slowest bottleneck of the process
Theory of Constraints The theory of constraints (TOC) can help management reduce cycle time. The TOC indicates that the flow of goods through a production process cannot be a faster rate than the slowest bottleneck of the process (Barfield, Raiborn, Kinney, 2001). Production limitations in a manufacturing environment are caused by human, material, and machine constraints. For example, a human constraint can be caused by an inability to understand or react. Machine constraints (bottlenecks) are points at which the processing levels are sufficiently slow to cause the other processing mechanisms experience idle time. Assume that Ford produces car parts in a two-department operation: Department 1 is labor intensive and Department 2 is automated. The average output of Department 1 is 50 units per hour. The units are then transferred to Department 2 where they are finished by a robot. The robot can finish a maximum of 100 units per hour, which means the robots are experiencing an idle time. Managing constraints is a process of continuous improvement. Once a constraint is identified in the system, managers will need to figure out how to utilize the constraint to avoid wasting constraint resources. This will have a negative financial impact if the constraint is not detected in the early stages. Opportunity Costs Opportunity costs represent the benefits foregone because one course
The Principles of Consumer Rights.
The Principles of Consumer Rights The modern consumer movement is largely a product of the 1960s with the foundation of the Consumers' Association in Britain. Ralph Nader was well known for his consumer campaigning in the United States of America and US President John F Kennedy declared to the US Congress that consumers have four basic rights. These were: * the right to safety * the right to be informed * the right to choose * the right to be heard. * To these 'Consumers International' added four more rights: * the right to satisfaction of basic needs * the right to redress * the right to education * the right to a healthy environment. Consumer rights were finally elevated to a position of international recognition and legitimacy, acknowledged by developed and developing countries alike. This single most important document for consumer protection serves as a vital lobbying tool for those campaigning for change. They provide both a framework and benchmark for government, particularly in developing countries, and for establishing their legal basis for consumer protection. The basic consumer rights are: * The right to satisfaction of basic needs - Access to basic, essential goods and services: adequate food, clothing, shelter, health care, education and sanitation. * The right to safety - To be protected against products, production, processes and services
Economic Theory - The Short and the Long Run & Economies of Scale
HNC Management Assignment By Vikki Carpenter Economic Theory The Short and the Long Run & Economies of Scale Reference: MicroEc' Outcome 2 pc(a) Give short written answers to the following questions (1) In economic theory what is the definition of: a: The Short Run The short run is a period of time when there is at least one fixed factor of production i.e. a factor input that cannot be altered. This is usually fixed capital such as machinery, the amount of factory space available, staff issues or even the area of land being leased or owned. In the short run a firm will have fixed and variable costs of production. Total cost = fixed cost + variable cost. b: The Long Run In the long run, all factors of production will be variable, for example a company may wishes to expand so they may take on additional premises, or staff levels may increase to cover increase productivity. (2) Explain in your own words, what may happen to a firm's average costs of production in the short run and long run. As a firm starts its production or services it creates its first SAC (short run average cost curve), this is shown in diagram by curve SAC1. Once it becomes successful it will increase size, staff, output etc and each time its fixed factor cost changes as the production output changes (rent, staff costs, raw materials etc) a new SAC begins (represented by SAC
