Comercio internacional: Teorema de Hecksher Ohlin

Summary

This video explains the Herbert and Link theorem, which focuses on comparative advantage in international trade. The theorem suggests that a country will export the good that intensively uses the factor of production it has in abundance—either labor or capital. Using the example of Haiti and the Dominican Republic, it illustrates how the Dominican Republic, abundant in capital, exports sugar cane, while labor-rich Haiti exports coffee. The video explores how factor endowments and production intensity determine trade patterns, assuming perfect competition and identical production techniques in both countries.

Takeaways

• 😀 The Heckscher-Ohlin theorem explains how the abundance of factors of production (labor and capital) determines comparative advantage in international trade.
• 😀 The theory suggests that countries will export goods that use their abundant factors of production intensively.
• 😀 The two main factors of production discussed are labor and capital, which are used in varying intensities across different goods.
• 😀 The Dominican Republic is capital-abundant, so it will specialize in and export capital-intensive goods like sugar cane.
• 😀 Haiti is labor-abundant, so it will specialize in and export labor-intensive goods like coffee.
• 😀 The theory assumes perfect competition in markets, no factor mobility between countries, and identical production techniques across countries.
• 😀 Capital-to-labor ratios are used to determine factor abundance: a higher ratio means capital is abundant, while a lower ratio means labor is abundant.
• 😀 For example, the Dominican Republic has a capital-to-labor ratio of 4, meaning it is capital-abundant and will export sugar cane (capital-intensive).
• 😀 Haiti has a capital-to-labor ratio of 0.7, making it labor-abundant and specialized in exporting coffee (labor-intensive).
• 😀 The theory uses a simplified 2x2x2 model: two countries, two goods, and two factors of production.
• 😀 The Heckscher-Ohlin theorem builds on earlier economic theories (e.g., Adam Smith and David Ricardo) but incorporates the role of capital as a key factor in determining trade patterns.

Q & A

Who formulated the Heckscher-Ohlin theorem and when?

The Heckscher-Ohlin theorem was formulated by Swedish economists Eli Heckscher and Bertil Ohlin, between the years 1919 and 1933.

What is the main idea behind the Heckscher-Ohlin theorem?

The theorem explains that a country will have a comparative advantage in producing and exporting the goods that intensively use the factor of production that the country has in abundance.

Which two factors of production are considered in the Heckscher-Ohlin model?

The model considers two factors of production: labor and capital.

How do Heckscher and Ohlin define a country's abundant factor?

A country's abundant factor is the factor of production that it possesses in relatively greater quantity compared to other factors.

What does 'intensity in the use of factors' mean?

It refers to how much of a particular factor (labor or capital) is required per unit of a good. A good is considered intensive in the factor it uses most heavily.

What are the main assumptions of the Heckscher-Ohlin model mentioned in the video?

The assumptions are: two countries, two goods, two factors of production; perfect competition in all markets; immobility of factors internationally; identical production techniques; and equal quality of factors in both countries.

How does the model explain the trade patterns between Haiti and the Dominican Republic?

The Dominican Republic is abundant in capital and therefore exports the capital-intensive good, sugarcane, while Haiti is abundant in labor and exports the labor-intensive good, coffee.

How is factor abundance quantitatively determined in the example?

By calculating the ratio of capital to labor. For example, the Dominican Republic has 800 units of capital and 200 units of labor, giving a capital-labor ratio of 4, indicating capital abundance.

Which good is considered capital-intensive and which is labor-intensive in the example?

Sugarcane is capital-intensive, requiring 12 units of capital per 6 units of labor, while coffee is labor-intensive, requiring 10 units of labor per 4 units of capital.

What prediction does the Heckscher-Ohlin theorem make about imports for each country?

The theorem predicts that each country will import the good that intensively uses the factor that is relatively scarce in that country. Hence, the Dominican Republic imports coffee, and Haiti imports sugarcane.

Why was capital ignored in earlier theories like Adam Smith and Ricardo's labor theory of value?

Earlier economists assumed that capital was proportional to labor and did not significantly affect production costs, so labor was considered the main determinant of value.

How does this model help explain modern trade patterns?

The model provides a framework to understand why countries specialize in producing and exporting goods that intensively use their abundant resources, which is observed in real-world trade patterns based on capital and labor endowments.