Factor Proportions Theory: A Mathematical Model Of General Librium In International Trade

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The literacy of trade varies from old time to modern dynasty. Supply and demand direct the flows of international trade balance and will become the primary factors that affect international trade policies. Resource endowment has been established to create full capacity to maximize efficiency of the product, which is essential to determine if the international trade and investment is competitive to survive in the market. The roles of demand and supply are constantly changing due to consumer preference, market trend, and countries’ policy. In global industry, it is important to maintain trade at the international level regardless of the strategic philosophy that country has established within them. into different Growth and development are broken …show more content…

The author use Eli Heckscher and Bertil Ohlin’s view to explain how the factor proportions theory 's runs. The author states that business and production forecast based on a trading area build 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 means, as a country will export products that ample and cheaper cost of production and import products that use the countries ' scarce factor. According to the "Factor Proportions Theory," HubPages states that the basic elements of Smith and Ricardo stressed the value of the proportion of factor proportions of theory based on the production of more modern concept, rose to same level of importance as the capital of labor. There are some new concepts from HubPages are easier to understand, he uses the two factor of production to states that different products needed the different proportions of the two factors of production, he shows the readers how the factor proportions of how the product is produced between the scale factors to a significantly different product

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