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A General Model of Comparative Advantage and the North-South Trade

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  • Yingfeng Xu

    (Department of Economics, University of Alberta)

Abstract

Comparative advantage is the most important foundation for world trade. Yet comparative advantage is usually explained by a series of unrelated models. We present a general model that incorporates all three distinct sources of comparative advantage: differences in technologies, differences in factor endowments, and differences in external economies of scale. Apart from being a versatile teaching tool, this model is especially appropriate for describing the trade pattern between developed and developing economies and for analyzing some important issues of trade policy and industrialization relevant for developing economies.

Suggested Citation

  • Yingfeng Xu, 2000. "A General Model of Comparative Advantage and the North-South Trade," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 25(2), pages 69-84, December.
    • Handle: RePEc:jed:journl:v:25:y:2000:i:2:p:69-84
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    References listed on IDEAS

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    1. James Harrigan, 1997. "Estimation of Cross-Country Differences in Industry," NBER Working Papers 6121, National Bureau of Economic Research, Inc.
    2. Junius, Karsten, 1997. "Economies of scale: A survey of the empirical literature," Kiel Working Papers 813, Kiel Institute for the World Economy (IfW Kiel).
    3. Xu, Yingfeng, 1993. "A General Model of Comparative Advantage with Two Factors and a Continuum of Goods," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(2), pages 365-380, May.
    4. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
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