¿Qué norma conoce para este tipo de máquinas?

3.2.1. The theory

Like the Ricardian model, the Heckscher-Ohlin model is also based on a number of very controversial assumptions:

1. Commodities are freely mobile internationally.

2. All countries use the same technology in production.

3. Factors of production are mobile domestically but immobile internationally.

4. Tastes are the same in all countries.

5. There are no scale economies.

6. There is perfect competition in all markets.

7. There are no transportation costs.

8. All resources are fully employed.

9. Countries have different factor endowments and thus factor prices. Factors of production are fixed and cannot be altered.

Given these assumptions, the theory asserts that ‘a nation will export the commodity whose production requires the intensive use of the nation’s relative abundant and cheap factor and import the commodity whose production requires the intensive use of the nation’s relatively scarce and expensive factor.’8 This means that the relatively

‘labour-rich’ nations will export the relatively labour-intensive commodities, since the wage rates are relatively lower, thus labour-intensive commodities can be produced cheaper. Similarly they will import the relatively capital-intensive commodities, since capital is relatively more expensive and production o f capital-intensive commodities will be more costly. As the theory is based on different relative factor prices, the reasons why different countries have different factor prices become the core issue in Heckscher-Ohlin theory.

The theory simply asserts that under special assumptions, the relative prices of these two special commodities (capital and labour) are determined by their relative

supplies. But what determines their relative supplies then? The answer lies in the concept of endowment. Since all countries, the theory argues, are endowed with different quantities of factors of production (such as natural resources, land etc.) and since these endowments are naturally determined, countries will employ the best combination of these factors to produce commodities in the most efficient way. If we focus on the most important factors, namely labour and capital, it is obvious that different countries have different capital and labour endowments. Some countries are endowed with more machinery (capital) than others. To determine if a country is capital or labour endowed (or abundant) we need to look at their comparative availability, namely capital-labour ratios. If one country has a higher capital-labour ratio compared to another, that country is endowed with capital, in other words it is capital-abundant.

This last point, however, requires further clarification since the capital-labour ratio can be defined in two different ways: in physical and in value terms. The ratio in terms of physical units considers only the supply of factors (availability of capital and labour) whereas the same ratio in terms of value considers their prices, that is, demand conditions as well as supply conditions. Since the demand for capital and labour is assumed to be derived demand, namely determined by the demand for the final commodities that require their use, the price of a factor of production might be relatively high even though its supply is relatively abundant if the demand for the commodity that uses that factor of production more intensively is relatively high. In other words, if the demand for a labour (capital) intensive commodity is high, the price of labour (capital) might be high even if it is the abundant factor o f production. In this case a country could be considered labour-abundant in terms o f the physical definition of capital and capital-abundant in terms of the value definition o f capital. To solve this difficulty, tastes and demand preferences are assumed to be the same in both countries so that the physical and value definitions of capital indicate the same level of abundance.

8 Salvatore (1995: 118).

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3.2.2. Factor-price equalisation

Samuelson argued that if the Heckscher-Ohlin theory was true, then when international trade, based on the factor endowment, takes place, the prices o f the factors would converge and would gradually be equalized in both countries; relatively and absolutely.

In this respect the theory purports that international trade has the same effect as the international free mobility of factors. The factor-price equalization theorem (also called the Heckscher-Ohlin-Samuelson theorem) holds only if Heckscher-Ohlin theory is proven to be true. As one country specializes in the production o f labour (capital) intensive commodities and reduces its production o f capital (labour) intensive commodities, the relative demand for the labour (capital) and the wage rate (interest rate) rises, and the demand for capital (labour) and the interest rate (wage rate) falls.

Trade possibilities are exhausted when relative and absolute prices o f the factors are equalized between countries.

As the relative and absolute prices are equalized, wages (interest rate) in the labour-abundant country rise (fall) and the wages (interest rate) in the labour-scarce country fall (increase). That is why in a labour-abundant country, workers would be in favor o f international trade whereas capitalists would be against it. The opposite would be true for the capital-abundant country. Thus the Heckscher-Ohlin-Samuelson model introduces some sort of peculiar class relationship into trade theory, since not all classes will benefit equally from free trade. For example, workers in labour-abundant developing countries will benefit, and capital will lose as a result o f a fall in the profit rate. The reverse is true for capital-abundant developed countries. Thus, capital in developing countries and labour in developed countries may object to trade liberalisation.

3.2.3. Predicting the trade pattern

The Heckscher-Ohlin-Samuelson model not only attempts to predict the current pattern of trade under free trade conditions but it also attempts to predict dynamic structural change in the long-run. ‘The dynamic comparative cost theory of Johnson (1968) is a synthesis of the static neoclassical Heckscher-Ohlin theory and several alternative theories, particularly the theories of the technology gap and the product

cycle.’9 According to the theory, the sectors involved in labour-intensive production are the natural candidates for growth in low-income countries. As specialisation takes place and the production of labour-intensive commodities increases, however, the demand for and the price of the abundant factor of production (labour) will gradually increase and those countries will gradually lose their comparative advantage in labour- intensive commodities. Thus they will gradually move to the production o f more capital-intensive techniques and commodities.10 A number of Asian countries, particularly Korea and Taiwan, can be given as examples of such a shift in comparative advantage.11