Gottfried Haberler's Principle of Comparative Advantage

Murray C. Kemp ^a* and Masayuki Okawa ^b
a Macquarie University
^b Ritsumeiken University

Abstract

Like the Torrens-Ricardo Principle of Comparative Advantage, Haberler's Principle rests on the implicit assumption that, in autarchic equilibrium, each country produces and consumes all commodities, at least incipiently. Without that assumption, both principles must be substantially qualified. In the present paper, which focuses on Haberler's Principle, the required qualifications are provided in detail.

JEL Classification: D60, F10, F13

Keywords: Comparative advantage, Gottfried Haberler

Trade, Technology and Real Wages in the United States: A Modern and Historical Perspective

Ravi Batra ^ab* and Hamid Beladi ^ab
ab Southern Methodist University
^ab University of Texas at San Antonio

Abstract

In this paper we re-examine the contentious facts and issues and argue that the technology explanation of the entire real-wage controversy contradicts logic, common sense and history, whereas the trade explanation passes the severe test of rationality. Using a simple model we illustrate that in an open economy technical improvements may generate a fall in some or all types of real earnings, but not in a closed economy.

JEL Classification: F10, O33, J31

Keywords: Real wages; trade liberalization; technological change

Planning versus Free Choice in Scientific Research

Martin J. Beckmann
Brown University and T U Munchen

Abstract

The potential benefits of centrally planning the topics of scientific research and who should be engaged in them are studied by means of a linear program. The efficiency conditions show that the planning goals could be achieved through self-motivated choices of scientists without direction by planners, when the "scientific worth" of problems is well-defined and known, provided the costs of research are essentially only the opportunity costs of the researchers. When substantial capital costs for apparatus arise, this self-motivation fails and some central control over benefit/cost becomes necessary. How this may be combined with the widest freedom of choice is discussed in the context of existing practices in sponsoring research.

JEL Classification: D61, D71

Keywords: scientific worth, scientific potential, prestige seeking, opportunity cost, big science, benefit / cost criterion

The Impact of RMB's Appreciation on China's Trade

Guihuan Zheng ^ab, Li Guo ^b, Xuemei Jiang ^b, Xun Zhang ^ab,
and Shouyang Wang ^ab

• ^a Academy of Mathematics and Systems Science, Chinese Academy of Sciences, Beijing 100080, China
  
• ^b Graduate University of Chinese Academy of Sciences, Beijing 100080, China

Abstract

With the announcement on 21 July 2005 that the RMB exchange rate regime would be reformed, great attention has been paid to the impact of the RMB's appreciation on China's trade. Since China is in transition from a pegged to a managed floating regime, no existing appropriate model and method can be utilized to investigate this question directly. In this paper, a scenario analysis technique is used to study this issue, coupled with the introduction of the substituted variables: Japanese yen and Euro exchange rate. Our results show that RMB appreciation would not bring severe effects on China's trade in 2005; however, a possible sustained reduction of export growth in 2006 should be given more attention. It is also necessary and urgent to press forward with the reform of RMB exchange rate regime, and put in place the related supporting policies to avoid sudden fluctuations such as the Japanese situation after the "Plaza Accord".

JEL Classification: C53, F17, F31

Keywords: RMB appreciation; China trade; scenario analysis

Issues of Manufactures Liberalization and Administered Protection in the Doha Round

Alan V. Deardorff ^a* and Robert M. Stern ^a
a University of Michigan

Abstract

This article focuses especially on the positions that the developing countries should take in their own interests on the issues of manufactures liberalization and administered protection. A series of recommendations are set forth with supporting argument, dealing with market access, adjustment, trade preferences, and other issues. Developing countries should participate actively and constructively in the negotiations to further their own interests. What is needed is leadership and cooperation, as for example with the Group of 20 and other coalitions, together with a willingness to listen and be flexible on the part of their developed country counterparts.

Keywords: manufactures, Doha, WTO