Левченко А.А.
Дніпропетровського університету імені Альфреда Нобеля, Україна
THE THEORY OF FACTOR PROPORTIONS
The development of
modern productive forces and trends in the internationalization of production
and funds increased the interest of scientists to the problems of international
economic relations, in particular international trade, which required the
development of a certain theory. In the middle 20s Swedish economic neoclassicists Eli F. Hecksher and
Bertil Ohlin developed the theory of factor proportions, known as Hecksher-Ohlin
Theory. Not abandoning the labour theory of value, they supplemented it with
the provision that in creating the price, except the labour are involved other
inputs, such as land and fund [2].
According
to the theory of factor proportions by Heksher-Ohlin, the difference in the
relative prices of goods in different countries and, therefore, the trade
between them are explained due to different relative factor endowment of the
countries. Every country exports those goods, for manufacturing of which it has
redundant inputs and import those goods, for which it has the relative lack of
production factors.
Scientists
investigate not directly connected with foreign trade causes of international
differences in prices: historical, climatic, traditional. E. Heksher and B.G.
Ohlin insisted that only national, climatic characteristics do not explain
fully the international differences in prices, but the source of different
levels of comparative costs is the factor proportions [3].
Inequality
in equipping the factors of production causes the necessity of international
trade. Every country will export to world markets exactly those goods, whose
production is based on usage of the largest and the cheapest factor:
labor-intensive (a large and cheap labor), capital-intensive (numerous and
cheap capital), material-intensive goods (numerous and cheap natural
resources). Increase in output of goods, which is based on the usage of a
certain numerous factor will cause growth in demand for it. And this will cause
its price increase. Inversely, the demand for factors associated with deepening
specialization of production, based on numerous factor, will be reduced. Consequently, their
prices will come down.
Price
increase on multiple factor of production will inevitably increase its offer,
and price deflation on other factors will reduce it. Consequently, on the one
hand, there will be observed the tendency towards the equalization of factor
price in the counterpart countries, because in every country the price of the
cheapest factor increases and the most expensive one – comes down. On the other
hand, inequality in factor endowment will increase, because in every country
increases the offer the most numerous factor. The result will be the deepening
of international division of production (differentiation of labor) and the
increase in the volume of international trade [1, p. 840].
As
a result, the international division of labour is formed effectually. In
particular, counterpart countries will produce profitable goods with minimum
consumption and will refuse from the manufacturing of those ones, for which
there are no cleared conditions. The goods will be produced with the minimum
consumption. In the market will be formed beneficial, well-structured price for
producers and consumers. This process determines the grading of differences in
factor endowment and in the international division of production (labour), a
shrinkage of international trade, because in countries, where prevails large
and cheap labour, gradually decreases the production of labour-intensive goods
and increases the production of capital-intensive ones, and in countries where
large and cheap capital is under way the quite opposite process.
The
theory by Heksher-Ohlin has its wide practical application. It was used in the
formation of foreign trade strategy of many countries. In order to enhance
factor advantages, governments resorted to measures, directed to the support
and stimulating of exports. For example, realized national devaluation of currency,
granted different privileges to the enterprises, subsidized for modernization
of production and updating of export products.
In
spite of the above active constraint, the theory of factor proportion helps to
determine which goods countries will exchange in the international market, and
contains valuable methodological approaches to the analysis of the impact areas
of international trade on relative prices of inputs and distribution of factor
income.
The
provisions of this theory are important for the theory of economic advance. It
is clear that for the country with the labor abundance, foreign trade can
potentially expand the abilities of fuller usage of this redundant resource
and/or cause raise in wages of the workers. At the same time, it becomes
possible to save foreign scarce currency, which is needed to purchase the
producer goods.
Литература:
1.
Архипов
И. И. Экономика: учебник для вузов / И. И.Архипов, А. К. Большаков. – М.: Проспект, 2006. – 840 с.
2.
Розвиток сучасних продуктивних сил і тенденції
інтернаціоналізації виробництва [Електронний ресурс]. – Режим доступа: http:// ua-referat.com
3.
Теорія співвідношення факторів виробництва [Електронний
ресурс]. – Режим доступа: http:// info-library.com.ua