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Pure Intermediate Products

In: Studies in the Pure Theory of International Trade

Author

Listed:
  • Raveendra N. Batra

Abstract

In the previous chapter our analysis focused entirely on the implications of inter-industry flows for various theorems in trade theory. As noted there, most of the trade literature on intermediate products concerns the commodities which serve the dual role of goods used for final consumption and as productive inputs. However, there exists another class of intermediate goods which are produced solely to be used as productive inputs and not for final consumption at all. Such goods may be called pure intermediate goods, and include produced inputs like raw materials, spare parts, steel, etc. The current literature in trade theory pays scant attention to the implications of such products. If the ramifications of pure intermediate products ran closely parallel to those of inter-industry flows, the current neglect of the former could be easily vindicated. However, as will be demonstrated in this chapter, there are important differences between the implications of the two types of material inputs, crucial among them being the fact that, unlike with the inter-industry flows, the gross and net factor-intensity rankings need not be identical in the presence of pure intermediate products. This implies that those traditional theorems in trade theory that depend exclusively on the nature of the differences between the factor intensities in the two final products may no longer be valid in the model that allows for the presence of pure intermediate products, even though these theorems continued to be valid in the model with inter-industry flows.

Suggested Citation

  • Raveendra N. Batra, 1973. "Pure Intermediate Products," Palgrave Macmillan Books, in: Studies in the Pure Theory of International Trade, chapter 8, pages 180-201, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-01423-1_8
    DOI: 10.1007/978-1-349-01423-1_8
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    Citations

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    Cited by:

    1. Baldwin, Richard & Robert-Nicoud, Frédéric, 2014. "Trade-in-goods and trade-in-tasks: An integrating framework," Journal of International Economics, Elsevier, vol. 92(1), pages 51-62.
    2. Baldwin, Richard & Robert-Nicoud, Frédéric, 2007. "Offshoring: General Equilibrium Effects on Wages, Production and Trade," CEPR Discussion Papers 6218, C.E.P.R. Discussion Papers.
    3. Rebecca Freeman & Richard Baldwin, 2022. "Risks and Global Supply Chains: What We Know and What We Need to Know," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 153-180, August.
    4. Lionel Fontagné, 1991. "Spécialisation et protection en présence de biens intermédiaires échangés," Revue Économique, Programme National Persée, vol. 42(1), pages 51-74.
    5. Richard Baldwin & Javier Lopez-Gonzalez, 2015. "Supply-chain Trade: A Portrait of Global Patterns and Several Testable Hypotheses," The World Economy, Wiley Blackwell, vol. 38(11), pages 1682-1721, November.
    6. Ravi Batra & Hamid Beladi, 2010. "Outsourcing and the Heckscher–Ohlin Model," Review of International Economics, Wiley Blackwell, vol. 18(2), pages 277-288, May.
    7. Thijs ten Raa & Pierre Mohnen, 2009. "The Location of Comparative Advantages on the Basis of Fundamentals Only," World Scientific Book Chapters, in: Input–Output Economics: Theory And Applications Featuring Asian Economies, chapter 23, pages 425-446, World Scientific Publishing Co. Pte. Ltd..
    8. Stephen Devadoss & Wongun Song, 2003. "Oligopsonistic Intermediate Input and Patterns of Trade," International Economic Journal, Taylor & Francis Journals, vol. 17(3), pages 77-97.
    9. Anu Kovarikova Arro, 2005. "Globalization, Increasing Returns in Component Production, and the Pattern of Trade," CERGE-EI Working Papers wp265, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    10. Richard Baldwin, 2014. "WTO 2.0: Governance of 21st century trade," The Review of International Organizations, Springer, vol. 9(2), pages 261-283, June.
    11. Chun-Yan Kuo, 1974. "A Two-Sector Growth Model with an Intermediate Product," Development Discussion Papers 1974-06, JDI Executive Programs.
    12. Joël Hellier, 2013. "The North-South HOS Model, Inequality and Globalization," Palgrave Macmillan Books, in: Joël Hellier & Nathalie Chusseau (ed.), Growing Income Inequalities, chapter 4, pages 107-146, Palgrave Macmillan.
    13. Fuller, Frank Harland, 1996. "The location of marginal production for value-added and intermediate goods: optimal policies and trade volumes," ISU General Staff Papers 1996010108000012147, Iowa State University, Department of Economics.
    14. Vandana Chandra & Ralph El-Chami & Jeffrey Fischer, 1991. "Development policies in the presence of unemployment and non-traded intermediate goods," Journal of Economics, Springer, vol. 54(1), pages 1-19, February.
    15. Nobuaki Yamashita, 2010. "International Fragmentation of Production," Books, Edward Elgar Publishing, number 13615.
    16. Lionel Fontagné & Michaël Freudenberg & Deniz Ünal, 1995. "Régionalisation et échanges de biens intermédiaires," Working Papers 1995-11, CEPII research center.
    17. Gérard Destane de Bernis, 1975. "Les limites de l'analyse en termes d'équilibre économique général," Revue Économique, Programme National Persée, vol. 26(6), pages 884-930.
    18. Marcela Sabaté, 2009. "Vertical Specialization and Nonstationarities in International Trade Series," The Institute for International Integration Studies Discussion Paper Series iiisdp309, IIIS.
    19. Fuller, Frank & Hayes, Dermot J., 2011. "Exchange Rate Impacts on the Composition of Agricultural Trade," ISU General Staff Papers 201101010800001562, Iowa State University, Department of Economics.
    20. Kazuhiro Testu, 2006. "Tourism Promotion and Regional Development in Low-income Developing Countries," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(3), pages 417-424.
    21. François Rocherieux, 1981. "Sur la théorie des modèles inter-industriels : quelques remarques appliquées à l'analyse de l'emploi et du commerce international," Revue Économique, Programme National Persée, vol. 32(5), pages 887-922.

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