MGEC81H3 Lecture Notes - Lecture 11: Surplus Labour, Industrial Revolution, Industrial Policy
1 May 2016
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Document Summary
Labor & capital move to where they have capital advantage: mobility labor not, capital is, model assumes both are mobile. The critique of traditional free-trade (cont"d: fixed resources, full employment, and the international immobility of capital and skilled. Challenged by north-south trade models left wing, rely on irts. Tech not redily avail if you have it, have more. Skill labor & tech governed by irts , the better you get. Outcome : divergence , trade leads to divergence, good for developed. 2 parties one beenfting (north) , not (south) Skills vs non skilled : porter"s competitive advantage theory: Traditional trade theory applies only to basic factors (unskilled labor, physical resources) But creation of advanced factors (knowledge resources, specialized infrastructure) is the first priority. Developing country- wehther you can trade products that embody skilled labor doesn"t happen on its own, just trading not lead to that. Diff from traditional theories laissez faire, leave it alone.
