Application of Stopler Samuelson Theorem: Australia and the USA
VerifiedAdded on 2019/11/12
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AI Summary
This report provides an analysis of the Stopler Samuelson Theorem, a key concept in international trade theory, which extends the Heckscher-Ohlin model by incorporating wages for labor and rent for capital. The report examines how trade impacts factor prices and production shifts based on a country's abundant resources. The analysis focuses on the application of the theorem in Australia and the USA. In Australia, the report observes a rise in the IPI with increased trade openness, aligning with the theorem, as Australia specializes in skilled labor-intensive goods. However, in the USA, the report notes a decrease in IPI with increased trade, which deviates from the theorem's expected outcome. The report references key macroeconomic texts and data to support its findings, highlighting the varying impacts of trade on different economies and their adherence to the Stopler Samuelson Theorem's predictions. The report also covers the concept of abundant resources and how that affects the IPI of the two countries.
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