a clockwork economy
DESCRIPTION
A clockwork economy. A three-dimensional trade model imbedded in the general equilibrium theory Koen Smet – Institute of International Economics and Development 2 nd FIW-Research Conference – International Economics. Structure. - PowerPoint PPT PresentationTRANSCRIPT
A clockwork economyA three-dimensional trade model imbedded in the general equilibrium theory
Koen Smet – Institute of International
Economics and Development
2nd FIW-Research Conference – International Economics
Structure
• South Africa´s trade structure with the EU and China and its evolution between 1993-2006.
• New classification measure
• A three dimensional trade model
• Basic structure
• Factor intensity
• A graphical solution
• The endowment triangle
• Triangles of diversification
• Conclusion
Folie 2
The evolution of the South African trade structure 1993-2006
Folie 3
Dynamic analysis: new approach
Folie 4Folie 4
Trade
DateGL
Intra
industry
Inter
industryRCA
Inter
Adv.
Inter
Disadv.
Brül
Brül
Brül
Intra-into (2%)
Intra-out of (6%)
Intra-intra (9%)
Inter-into (+) (8%)
Inter-out of (+) (8%)
Inter-intra (+) (8%)
Inter-into (-) (6%)
Inter-out of (-) (32%)
Inter-intra (-) (21%)
Revealed Comparative AdvantagesGeneral
Folie 5
Export Flows – Matrix Classification
Folie 6
Results of the empirical analysis
• General findings
• Grubel-Lloyd index
• Trade specialisation between 1993 and 2006
• Trade Flows
• Imports (EU): Medium and high-technology products, whose production is labour- or capital-intensive
• Imports (China): Labour-intensive, low- and medium-technology consumer goods
• Exports: Primary resource-based manufactures (cf. mining and quarrying industries) and low-technology capital-intensive manufactures
Folie 7
Theoretical Model - Inspiration
• Literature:
• Samuelson (1953)
• Chipman (1966 / 1969)
• Batra (1970)
• Jones and Scheinkman (1977)
• Chang (1979)
• Takayama (1981)
• Ethier (1984)
BUT: Focus on the mathematical solvability of the model and the generalisation of the 2x2x2 theorems.
Folie 8
Theoretical Model - Assumptions
• Basic structure
• Three production factors: L, H and K
• Three industries
• Three countries: South Africa, EU and China
• Further assumptions
• Zero-Profit condition
• Market-Clearing condition
Folie 9
Theoretical Model – Factor Intensity
• Double bilateral comparison is not applicable
• The ratio of the distributive share of a certain factor within a specific industry and this factors overall distributive share
Folie 10
HwLwKw
Kw
pXwK
z
HLK
K
K
K
11
1
1
The Endowment Triangle
• Literature
• McKenzie (1955)
• Leamer (1987)
• Jones and Marjit (1991)
• Jones (1992 / 2005)
Folie 11
Graphical solution – The concept of the endowment triangle
Folie 12
K
HL
(1,0,0) (0,1,0)
(0,0,1)
v1
v2
(L1,H
1,K
1)
Folie 13
Endowment triangle - Application
K
HL
ZAF
EUCH
Folie 14
Triangles of diversification
Folie 15
Import and export flows
Concluding remarks
• During the period 1993-2006 specialisation was the dominant trend within the South African trade structure.
• The concepts of endowment triangles and of triangles of diversification allow for the construction of a three-dimensional Heckscher-Ohlin-Samuelson trade model.
• Further research should concentrate on:
• a discussion of the input-vectors.
• a comparative static analysis between autarky and free trade.
• the empirical justification of educated assumptions.
Folie 16