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Chapter 3

Chapter 3 Specific Factors and Income Distribution (continue). 一、 International Trade in the Specific Factors Model.

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Chapter 3

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  1. Chapter 3 • Specific Factors and Income Distribution • (continue)

  2. 一、International Trade in the Specific Factors Model For trade take place, the two countries must differ in the relative price of manufactures that would prevail in the absence of trade. International trade alters(改变) the relative prices of goods and thus the amount of labor used in each sector, the real wage to labor and the returns to capital and land.

  3. Assumptions of the model • The trade take place if the two countries differ in the relative price of manufactures. • The price is determined by demand and supply. • Assume that both countries (Japan and US) have the same relative demand curve. • The only source of international trade is the differences in relative supply (Technology and Factors of production) .

  4. Resources and Relative Supply • What are the effects of an increase in the supply of capital stock on the outputs of manufactures and food? • A country with a lot of capital and not much land will tend to produce a high ratio of manufactures to food at any given prices.

  5. Wage rate, W Wage rate, W PF1 X MPLF 2 W2 1 W1 PMX MPLM2 PMX MPLM1 Amount of labor shifted from food to manufactures Labor used in food, LF Labor used in manufactures, LM Changing in the capital stock Increase in capital stock, K

  6. An increase in the supply of capital would shift the relative supply curve to the right, the relative output of manufacture would rise (Why ? ) • Other things equal, an increase in the quantity of capital would raise the marginal productivity of labor in the manufacture sector.

  7. An increase in the supply of land would shift the relative supply curve to the left. • What about the effect of an increase in the labor force? • The effect on relative output is ambiguous, although both outputs increase, it depends on the endowment of each country.

  8. Trade and Relative Prices • Suppose that Japan has more capital per worker than America, while America has more land per worker than Japan. • Then the situation will look like that in Figure 3-11. Japan’s relative supply curve RSJ lies to the right of America’s curve RSA,

  9. Relative price of manufactures, PM /PF RSA RSWORLD (PM/PF )A RSJ (PM /PF )W (PM/PF)J RDWORLD Relative quantity of manufactures, QM/QF Figure 3-11: Trade and Relative Prices

  10. Because Japan’s abundance of capital and scarcity of land leads it to produce a large quantity of manufactures at any relative prices. As a result, the pretrade relative price of manufactures in Japan is lower than the pretrade relative price in America.

  11. International trade leads to a convergence of relative prices, which lies between the national pretrade prices. It has increased the relative price of manufactures in Japan and has lowered it in America. • The world relative supply curve lies between the two national curves.

  12. The Pattern of Trade • If trade occurs initially because of differences in relative prices of manufactures, how does the convergence of PM/PF translate into a pattern of international trade?（Impacts of changes for PM/PF） • To answer this question, we need to state some basic relationships among prices, production, and consumption.

  13. In a country that cannot trade, the output of a good must equal its consumption . • International trade makes it possible for the mix of manufactures and food consumed to differ from the mix produced.

  14. A country cannot spend more than it earns, that is budget constraint. • DF － QF = (PM/PF) × (QM － DM ) (3-9)

  15. Consumption of food, DF Output of food, QF 1 Q1F Production possibility curve Consumption of manufactures, DM Output of manufactures, QM Q1M Figure 3-12: The Budget Constraint for a Trading Economy Budget constraint (slope = -PM/PF)

  16. Figure 3-12 illustrates two important features of the budget constraint for a trading economy. • First, the slope of budget constraint is minus PM/PF, it means that consuming less one unit of manufactures saves the economy PM , this is enough to purchase PM/PF extra units of food.

  17. Second, the budget constraint is tangent to the PPF at the point 1. That is , the economy can always afford to consume what it produces.

  18. We can now use the budget constraints of Japan and America to construct a picture of the trading equilibrium.

  19. Quantity of food Quantity of food America’s food exports Japan’s food imports Quantity of manufactures Quantity of manufactures QJM QAM DJM DAM Japan’s manufactures exports America’s manufactures imports Figure 3-13: Trading Equilibrium (Using the budget constraints of Japan and America) Japanese budget constraint American budget constraint QAF DAF DJF QJF

  20. In Figure3-13 : • In Japan, the rise (see 3-11) in the relative price of manufactures leads to a rise in the consumption of food relative to manufactures and a fall in the relative output of food.

  21. In America, the post trade fall in the relative price of manufactures leads to a rise in the consumption of manufactures relative to food and a fall in the relative output of manufactures. • As result, Japan becomes a food importers and a manufactures exporter, the imports equals the exports. It is the reverse for US. The qualities are shown by the equality of the two colored triangles in Figure 3-13.

  22. 二、Income Distribution and the Gains from Trade • Trade can effects the income distribution. • To assess the effects of trade on particular groups, the key point is that international trade shifts the relative price of manufactures and food.

  23. Trade benefits the factor that is specific to the export sector of each country, but hurts the factor that is specific to the import-competing sectors. • Trade has ambiguous effects on mobile factors.

  24. Case study The employment and gains from trade in China and U.S.

  25. 据报道，自从3年多以前布什就任总统以来，美国已经失去了超过200万个就业岗位。不幸的是，总统候选人在谴责就业岗位失去的原因时，指责发展中国家抢走了他们的饭碗。据报道，自从3年多以前布什就任总统以来，美国已经失去了超过200万个就业岗位。不幸的是，总统候选人在谴责就业岗位失去的原因时，指责发展中国家抢走了他们的饭碗。 近来，中国继续成为全球转移生产设施的首选目的地。中国作为出口平台的实力促进了收入的提高和就业机会的增多。2004年新增就业860万人。

  26. 据调查，山东省2002年出口冻鸡以及熟制品23万吨，计4.57亿美元。按1吨鸡肉需要1300只鸡计算，23万吨鸡肉需要约3亿只鸡。按山东农户的养殖水平计算，一个农户（平均2个劳动力）可养殖2万只鸡，则可解决30万农村劳动力的就业；再加上加工企业约60多万人，山东鸡肉出口一年可为农民提供90多万人的就业机会。据调查，山东省2002年出口冻鸡以及熟制品23万吨，计4.57亿美元。按1吨鸡肉需要1300只鸡计算，23万吨鸡肉需要约3亿只鸡。按山东农户的养殖水平计算，一个农户（平均2个劳动力）可养殖2万只鸡，则可解决30万农村劳动力的就业；再加上加工企业约60多万人，山东鸡肉出口一年可为农民提供90多万人的就业机会。

  27. 测算表明，出口1万美元的鸡肉，可提供19.7人的就业机会。劳动密集度较高的蔬菜出口带动的就业更多，1万美元的出口拉动达30多人直接和间接就业。测算表明，出口1万美元的鸡肉，可提供19.7人的就业机会。劳动密集度较高的蔬菜出口带动的就业更多，1万美元的出口拉动达30多人直接和间接就业。

  28. 一件在中国加工的Hugo Boss衬衫，在美国纽约最繁华的Saks Fifth Avenue百货公司的零售价是120美元，在这120美元中，渠道商Saks Fifth Avenue赚了72美元（占60% ），名牌商Hugo Boss赚了36美元（占30% ），而中国的制造商只赚取了12美元（占10%），这就是中国外贸的真实写照。而大多数时候，中国的制造商们还在打价格战，很可能只以9.6美元（8%）的报价争抢订单，最后中国制造商的利润率往往跌落到1%至2%，而生产这件衬衫的中国工人就可能只拿到0.2美元的报酬，不到这件衬衫售价的五百分之一。

  29. 目前，在美国的鞋类市场中，其本国生产的只占5%，另外95%依靠进口。美国是我国最大的鞋类出口地，据美国商业部的统计，从中国进口的鞋占其鞋类产品进口总额的64.5%。美国人均6-7双鞋的年消费量中有4-5双来自中国。我国生产的鞋类产品大都在美国的低档鞋店销售，皮鞋的价位一般都在10-30美元之间。价位明显低于意大利、西班牙、巴西等国的产品，而且所有中国制造的皮鞋都没有自己的品牌，均使用国外商标和品牌。目前，在美国的鞋类市场中，其本国生产的只占5%，另外95%依靠进口。美国是我国最大的鞋类出口地，据美国商业部的统计，从中国进口的鞋占其鞋类产品进口总额的64.5%。美国人均6-7双鞋的年消费量中有4-5双来自中国。我国生产的鞋类产品大都在美国的低档鞋店销售，皮鞋的价位一般都在10-30美元之间。价位明显低于意大利、西班牙、巴西等国的产品，而且所有中国制造的皮鞋都没有自己的品牌，均使用国外商标和品牌。

  30. 《今日美国报》发表一篇题为《美国人２４小时离不开中国货》的文章介绍：早晨６点闹钟响了，美国进口的闹钟有２／３来自中国；中午锻炼穿的运动鞋有近５０％是中国生产的；晚间熄灯，床头灯和办公室的台灯一样有将近５０％是中国制造的。其中最说明问题的是鞋子换飞机的事例。《今日美国报》发表一篇题为《美国人２４小时离不开中国货》的文章介绍：早晨６点闹钟响了，美国进口的闹钟有２／３来自中国；中午锻炼穿的运动鞋有近５０％是中国生产的；晚间熄灯，床头灯和办公室的台灯一样有将近５０％是中国制造的。其中最说明问题的是鞋子换飞机的事例。

  31. Could those who gain from trade compensate those who lose, and still be better off themselves? • If so, then trade is potentially a source of gain to everyone.

  32. The fundamental reason why trade potentially benefits a country is that it expands the economy’s choices. • This expansion of choice means that it is always possible to redistribute income in such a way that everyone gains from trade.

  33. Consumption of food, DF Output of food, QF 2 1 Budget constraint (slope = - PM/PF) Q1F PP Q1M Consumption of manufactures, DM Output of manufactures, QM Figure 3-14: Trade Expands the Economy’s Consumption Possibilities

  34. Before trade, economy’s production and consumption were at point 2 on its PP. After trade, the economy can consume at any point on its budget constraint. The portion of the budget constraint in the colored region consists of feasible post trade consumption choices with consumption of both goods higher than at the pretrade point 2.

  35. 三、The Political Economy of Trade: A Preliminary View(初步观察) Trade often produces losers as well as winners. The models presented in this chapter provide a framework（框架） for a preliminary discussion of the political economy of trade.

  36. Optimal Trade Policy（最佳贸易政策） • The government must somehow weigh one person’s gain against another person’s loss. • Some groups need special treatment because they are already relatively poor (e.g., shoe and garment workers in the United States).

  37. Most economists remain strongly in favor of more or less free trade(three reasons in the textbook---P58). • Any realistic understanding of how trade policy is determined must look at the actual motivations（动机） of policy.

  38. Income Distribution and Trade Politics • Those who gain from trade are a much less concentrated, informed, and organized group than those who lose. • The groups that lose from trade easily lobby their governments to restrict trade and protect their incomes. • Example: the U.S. sugar industry(Page 58)

  39. 四、Exercise Problem 3.4 in the textbook

  40. 五、Review The textbook on page 50-59

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