Theories of International Microeconomics

Theories of International Microeconomics 1. Introduction Economic theory can be considered as a system of ideas that contains a set of models designed to explain economic outcomes and make predictions for future events. The choice of the model will depend principally on the explanatory value and the certainty of the model in explaining current situations and predicting future outcomes. International trade is the difference between production and consumption. The theory of international trade has heavily been influenced by the works of classical economists. According to David Ricardo, trade occurs between countries because of differences in technology. For Eli Heckscher and Bertil Ohlin, trade arises mainly due to differences in factor endowments and factor intensities of respective countries. 2. Ricardian Model The Ricardian Model was developed in 1817 by David Ricardo (1817) with two goods, two countries and a single input as components of the model. This model assumes differences in technology between countries as basis of trade. Ricardo stated that both countries could benefit from trade on the condition that labor input of countries should be different, irrespective of the fact that one country might has an absolute advantage in the production of both goods. Being a one factor model, the Ricardian Model is not the appropriate model to study the effects of technology on trade patterns because of its simplicity. 3. The Heckscher Ohlin Model The Heckscher Ohlin (HO) theory holds two assumptions; countries have different factor endowments and factor intensities as sources of differences in opportunity costs of production. Trade is restricted between 2 countries, 2 factors of production and 2 goods traded. This model generates 4 predictions: (a) The Heckscher – Ohlin theorem, whereby the capital abundant country will export the capital intensive good, (b) The Factor Price Equalization Theorem, with production of different goods, international trade will equalize factor prices, (c) The Stopler-Samuelson Theorem, with production of different goods, an increase in the price of a labor intensive good will reduce the real and relative return to capital and will increase the real and relative return of the labor intensive good, (d) The Rybczynski Theorem, with production of different goods, a rise in the endowment of labor, will lead to a more than proportionate increase in the output of the labor intensive good and a fa ll in the capital intensive good. 3. 1 The Heckscher – Ohlin Theorem The Heckscher – Ohlin theorem implies that a country will export those goods that are produced through intensive use of factors of production found locally in an abundant amount. In a 2 2 2 model, countries produce the same pair of commodities, engage in free trade in a competitive environment with countries benefitting from constant returns to scale in accordance with technology. The supply of factors of production is perfectly inelastic in both countries. These conditions are present when there is relative factor abundance. A second situation can arise where autarkic factor prices are present in both countries. Demand and supply conditions dictate autarkic factor prices. Despite a country being relatively abundant in labor, it may nonetheless impose autarkic wage rate if domestic preferences pattern strongly favors the labor intensive produced good relative to the foreign produced good. The trade pattern will reflect the factor price comparison between countries. 3.2 The Factor Price Equalization Theorem This theorem assumes a situation where there are 2 countries in free trade; they have different factor endowments but have the same level of technologies. If both countries are diversified and Factor Intensity Reversal (FIR) does not occur, factor price equalization will happen in these countries. For Heckscher, identical production techniques were prerequisite for the equalization of factor prices. Different factor prices can be a sufficient cause for international trade to happen. However, Heckscher did not account for the number of factors and international markets. The initial model was a 3 2 classical model with 3 factors such as land, labor and capital, and two goods: textile and machinery. 3.3 The Stopler-Samuelson Theorem The Stopler-Samuelson Theorem was developed as a 2 2 model, with two traded goods and two non – traded factors. It sets forth that an increase in the relative price of a good will lead to an increase of real return of that factor used intensively in producing that good and will reduce real return to the second factor. Four possible interpretations arise from this theorem: (a) winners and losers corollary; If a relative price change occurs, there will be a minimum of one loser ans one winner (b) Factor – industry detachment corollary; external price changes will have an impact on the return to a factor irrespective of which industry the factor is employed (c) scarce factor corollary 1; trade barriers will help a scarce factor; an abundant factor is hurt (d) scarce factor corollary 2; depending on the scarcity of the factors, trade barriers will help. 3.4 The Rybczynski Theorem The two – factor two good Rybczynski Theorem posits that if there is an increase in factor endowment of an industry that uses that factor fully, an increase in output is likely to occur compared to a decrease in output in the other industry. There are 4 levels of interpretation that can be observed from the Rybczynski Theorem: (a) a minimum of one Rybczynski derivative will be negative, (b) a homothetic relationship exists between output and factor supplies, (c) the relationship will be a linear one, (d) the total amount of current factor supplies is important. 4. International Trade: The Evidence International microeconomics seems little affected by empirical evidence. Despite trade flows being measured with the greatest accuracy, the data obtained has not been really reliable and to certain extent inaccessible. Empirical studies based on this data can hardly be reviewed or taken seriously as a proper revaluation of the theories proposed by classical economists. Attempts to bridge the gap between the trade patterns and the theoretical assumptions made by the various classical and neo classical models have been made and several problems arose. The first problem that rises is that international trade is arbitrage. This is principally due to price discrepancies governing the international markets. Autarkic prices differences have not been observed and these discrepancies are hypothetical in nature. There is no solid evidence as international trade gets rid of these discrepancies. Another difficulty linked to this is causality. Whatever the consequence, the human mind has always hoped that a single cause must be behind its initial inception. The Ricardian Model and the Heckscher Ohlin model are unicausal. Everything has a single root. For arbitrage in international trade, autarkic prices discrepancies cannot be the only explanation as to why there is arbitrage in the first place. Changes in factor endowments, tastes and preferences or difference s in technologies can form part of the supplementary explanations. In the last 4 decades, there have been 3 types of empirical studies on international trade. These are tests of the Ricardian and HO models, studies trying to find a link between bilateral trade, national incomes and geographical distances between trading countries, and finally, a number of informal accounts yet to be tested and accounted for. MacDougall (1951, 1952) carried out a study using 1939’s data for a UK-US comparison to find whether exports of good of different countries were correlated in pairs with third markets as the Ricardian model presumed. Results were positively and significant. Later empirical studies provided additional support to these results (MacDougall et al., 1962, Stern, 1962; Balassa, 1963) The assumption that consumers have homothetic preferences has been empirically refuted. Following studies carried out by Prebisch (1950) and Singer (1950), results have showed that the terms of trade for poor countries has been deteriorating continuously. As world economy experiences economic growth, the relative demand shifts from the South to the industrialized North, a region that specializes in goods with higher income elasticity. The South benefits little from improvement in production in exports sectors, principally because the extra purchasing power generated by lower southern commodities will be spent on purchase of northern commodities. Studies carried out by scholars affected significantly the reliability of the HO theorem. Patterns of trade were examined between US, West Germany, Japan and Canada with the rest of the world. Results obtained were not in consensus with the HO theorem whereas results of East Germany and India showed support (Bharadwaj, 1962; Leontief, 1953, 1956; Roskamp, 1961; Stolper and Roskamp, 1961; Tatemoto and Ichimura, 1959; and Wahl, 1961). Another study carried out by Clifton, Jr and Marxsen (1984) obtained relatively the same results. They used a multi-commodity, two-country, and two factor model to test for trade based on profit and wages instead of using capital and labor as factors of production. Results obtained show trade patterns for the year 1968 of Australia, Ireland, Japan, Korea, New Zealand, and the United States support the theorem while results of UK, Kenya and Israel do not. In his study to discover the sources of the success of the American industry for the years 1879, 1899, 1909, 1914, 1928, and 1940, Wright (1990) concluded that the capital to labor ratio was an important source of comparative advantage in the early years but it soon became a comparative disadvantage by 1940. Natural resources did not contribute to exports success in the 19th century but in the 20th century it impacted exports significantly. The reasons provided by the HO theorem that difference in capital and labor endowments are the primary reasons for trade is wrong and thus a need for further study in this area. The most important study of trade patterns through use of HO models was carried out by Leontief (1953). The results showed that in 1947, U.S imports were more capital intensive compared to labor than the ratio in U.S exports. This paradox exists if U.S is well endowed in capital. This paradox can be solved through 2 ways: (a) by creating demand or factor intensity reversals (FIRs), (b) the introduction of international technological differences. By introducing these solutions, the American labor intensive industries benefited from significant advantage in terms of costs arising due to factor endowments. Linnemann (1966) using data from more than 40 countries carried out a study to find a link between bilateral trade, national incomes and geographical distances between trading countries. He wanted to find answers relating to the bilateral trade volumes and trade size with different trading partners. Results illustrated that the volume of trade depends much on the geographical proximity of trading partners inclusive of transport costs. The importing country’s national income and the exporting country’s national income also had an impact on the size of tradable commodities. Minhas (1963) carried out a study to question the applicability of the FPE theorem due to the presence of Factor Intensity Reversals (FIRs). Minhas came to the conclusion that when elasticity of substitution differs between countries, FIRs are likely to occur. Through trade, equality of commodity prices will not guarantee a price equalization of factor prices in respective countries. Conclusion Trade occurs simply because of the price discrepancies that exist in the markets. Technological differences and factor endowments are the main reasons for these discrepancies. The numerous and complex literature on the Ricardian Model and Heckscher Ohlin Model have outlines various faults of these models but they nonetheless remain healthy. However, additional modifications need to be done. The models need to account for technological differences, multiple cones of diversification and home bias. References: Ronald Winthrop Jones. A, 1979, ‘International Trade: Essays in Theory’, Oxford North Holland Publishing Co, Amsterdam, New York Ronald Winthrop Jones. A and Kenen Peter B. (Eds.), 1984, Handbook of International Economics 3, North Holland Balassa, B. 1963, ‘An Empirical Demonstration of Classical Comparative Cost Theory’, The Review of Economics and Statistics, Aug, Vol. 45, No. 3, pp. 231-238 Mac Dougall, G. D. A, 1951, ‘British and American Exports: A Study Suggested by the Theory of Comparative Costs. Part I’, The Economic Journal, Dec, Vol. 61, No. 244, pp. 697-724 Mac Dougall, G. D. A, 1952, ‘British and American Exports: A Study Suggested by the Theory of Comparative Costs. Part II’, The Economic Journal, Aug, Vol. 62, No. 247, pp. 487-521 Feenstra Robert, C. 2002, ‘Advanced International Trade: Theory and Evidence’, University of California, Davis, and National Bureau of Economic Research, Aug. Prebisch, R. 1950, ‘The Economic Development of Latin America and Its Principal Problems’, New York: United Nations, Econ. Comm. Latin America Clifton, D. S, Jr and William B. Marxsen, 1984, ‘An Empirical Investigation of the Heckscher-Ohlin Theorem’, The Canadian Journal of Economics / Revue canadienne dEconomique, Feb, Vol. 17, No. 1,pp. 32-38 Matsuyama, K., 2000, ‘A Ricardian Model with a Continuum of Goods under Nonhomothetic Preferences: Demand Complementarities, Income Distribution, and Northà ¢Ã¢â€š ¬Ã‚ South Trade’, Journal of Political Economy, Dec, Vol. 108, No. 6, pp. 1093-1120 Redding Stephen J., 2006, ‘Empirical Approaches to International Trade’, Oct, London School of Economics and CEPR

Andy Warhol Term Paper

Term Paper on Andy Warhol The artist that had the most influence in the 20th Century was Andy Warhol. His life was such a struggle from the beginning he contracted rheumatic fever at a young age and had neurological problems. He was born of parent's that were from Czechoslovakia and moved to Pittsburgh before his birth on August 6, 1928. His mother had a huge influence on his art and would buy him candy bars as a reward for painting. His father died when he was young and his older brother took care of him while his mother worked.Every day his brother would make him Campbell soup and a sandwich for lunch. That later became the focus of one of his painting series. Julia his mother started taking him to free Saturday art classes at a local museum. Andy would stay late and wonder the museum focusing every detail of the paintings. His father set aside the funds for Andy to go to college. In 1949 he graduated from Carnegie Institute of Technology. He also showed signs of having Espalier's Syndrome or Autism throughout his life. In his teenaged years he had several nervous breakdowns and was almost suspended from college.He was very socially awkward and was very self conscious of his looks. He had nose Jobs and skin ending processes done to help with the red splotches on his face that was a result of the rheumatic fever from his childhood. Andy moved to New York and was determined to get a Job in commercial art to ultimately become famous. He started hanging out a a little cafe in Manhattan called Serendipity. At this time Marilyn Monroe was always with her friends there so she became the object of Andy obsession at that time. This is probably why she is seen in his later works.This time period in his life everyone referred to him as â€Å"Raggedy Andy' because he was always seen in the same clothes and carrying a brown paper gag with all his drawings in it. He was struggling with his homosexuality and his fear of imperfection in himself. There were several attempt a t having a relationship, but they ended with him very depressed for days. After making the conscious decision to change his view on this and forget about it so he could focus on his art. He wanted so desperately to become an recognized artist in the art community. That came later that he intended , but with more fame than he could ever imagine.Anta's work took on so much meaning and was a mirror of life under all the masks that everyone wore. He saw people from the inside and was noted at detecting retreats in people. The height of his art career was when he opened the Factory where he would have lavish parties and would begin dabbling in the film industry. Critics were very harsh on Anta's first films such as Sleep an 8 hour long movie filming a man sleeping. When asked about why he would film that he replied why not the man was his friend and he left his door unlocked. He had a desire to show beauty and greatness in the most plain things.His studio gave people from all walks of li fe a place to come and be their self. He studied these people and enjoyed them begin there while he created his art work. The atmosphere he created in the Factory was what is refereed to as the start of the ass's. He was very sensitive to many things so he would rarely indulge in any of the drug taking parting that was going on around him. Instead he would Just watch everyone and that was like his inspiration for his art. However he did have a slight addiction to amphetamines that he refereed to as giving him the power to do more work.He was able to be a art creating machine. He was quoted at saying you should Just keep creating art even when others think it is not good. That was his drive he adapted after all his failures he endured along the ay. After Andy survived an assignation attempt that left him in the hospital for several weeks his art began to change. He was more emerged in the serial reproduction of images in his art work. He was asked to do a portrait of a congress woman and he took her all over the town to photo strip booths with a baggie of coins he coached her through each picture session.Then he took them back and screen printed them in a series and she said it was the best representation of her portrait she could of ever imagined. The coaching in the photographs will later be a precursor to his directing career. Andy Whorl's art will withstand the test of time and he became everything he ever imagined his self to be. The piece of artwork that had the biggest impact on Andy Whorl's art career was a series of 32 painting's of all the varieties of Campbell soup cans. These painting's were created after Andy had several years of failed attempts to get his art work known.Always unsure of his direction with his own art it was important to Andy to get the opinion of his friends. After focusing on his painting skills so much that he was painting normal everyday household cleaners and objects over and over until he Hough it was perfect. He developed a new form of painting it got rid of brush strokes and drip marks. It had clean cut perfect edges. At this time in the art era it was Jackson Pollock's influence in art this was out of the art realm of the time. He did some coca cola paintings like this then moved on the the soup can's after one of his friends saying he should paint everyday stuff like soup can's.The Fears Gallery in Los Angels, California exhibited the entire collection for a few weeks. After that time Irving Blue called Andy and told him that for reasons he can not explain the time he pent with the painting's have changed him in such a positive way that he wanted to purchase them. He bought he collection for $1,000 and sold the collection to the Museum of Modern Art for 5 Million dollars. The Thirty-two painting's were done in 1962 the canvases were all the same size (20 x 16†³) with a chosen medium of Synthetic polymer paint.Each can is a different flavor labeled on the front. The can's are all similar on the outside, but upon close observation I noticed that each top had a series of missing spots where the glare was different on each can. I then observed the them all as a group and realized that it presents society and how by genetic makeup we are all the same, but in reality we are all very different complex creatures capable of so many amazing things. This represented hope for achieving greatness. Before this time Anta's art was viewed as lacking a emotional connection to the viewer.When he sold the collection to Irving he made him agree to keep it as an complete collection because Andy said they were all conceived at the same time. They are all still intact and together as a completely collection to be viewed at the Museum Of Modern Art. This set of paintings were very dear to Andy and had a very personal connection to them. Looking back at his childhood after his father died the soup was the only stable thing in his life at that time. He had it everyday and he always felt that the m ost ordinary objects in our everyday lives needed to be shown for their simple beauty.He wanted everyone to see beauty and feel beautiful. There is another element to these painting that everyone can connect to. Each one is entirely different than the next yet as a group are all the same. The detail that he took to individualize every one could be compared to the work of god. He was raised Byzantine Catholic and went to church every week with her. The Religious influence in his art was from this time period in his life. He was a very sheltered boy and at church he would sit and stare at all the religious artwork. This artwork was brightly colored portraits on gold plates on a grid frame of the back wall of the church.This was how he portrayed a painting he did right after Marilyn Monomer's death in 1962. This painting was called Golden Marilyn Monroe. He was able to achieve this copy printed look by silk screening all the images onto the paintings. There was a technique he developed where he would paint the color on the canvas then screen print the image over the color. This is why in this painting you see the lip color go beyond where the lips are printed and the eye shadow looks like a child put it on. Also the hair line is very Ronald McDonald looking.The precision it took to screen print on a painted canvas had to be very hard. This technique helped him add a color element to the commercial print art world he painted in. The idea behind the Marilyn paintings was to show fame in mass society. This was Just the start of Anta's famous people painting's in this time period. This was refereed to as the death and fame period in his art work. Some of his subjects were Elvis Presley and Ann Taylor. When Andy moved to New York he would sit in the ice cream shop and watch Marilyn so this painting was a way for him to immortality her forever.That is why she was surrounded by gold to show a heavenly portrayal and gave her bright colors similar to the church paintings. This painting is one of them most famous paintings of Marilyn and can been seen on so many things from clothes to purses and even phone covers. This tribute he did to here has stood the test of time as did the Campbell soup can it is still the same after all this time. This painting also represents Anta's quest for beauty and how he connected beauty to fame. Marilyn was the perfect blend of beauty and fame.After this series of paintings he moved on to some more gruesome screen prints of car crashes to show people the reality of what the news was reporting. He also wanted to pay tribute to people and things that are forgotten or lost in everyday life. Also he was noted as having the need to leave his influence in history. The reason I chose Andy Warhol is my desire to be a graphic artist and he had such an insight in the start of pop art. He was such a genius of his time with how he over came so many things. I could connect with him in so many ways through his art ND his personal li fe.His struggle to stratum took so many turns before he made it. I totally understood his need to become a machine with making art. I have recently started using markers in all my paintings and I can get one done a day where when I was painting them all by hand it took weeks. I am now extremely interested in learning more about screen printing to help me speed up the process and to use my own photographs. Just to do some paintings in his paint style with the paint first then screen print over it would be a lot of fun. I love how quick he could produce art they aid he created sass of paintings in a month.Also I loved how all the Campbell soup painting's were 16 x 20†³ that is the size of all my paintings and is a commonly starter artist canvas size. I do series of paintings on this size and from learning about his techniques I realized my art style is very similar. Even my husband said it's like you are looking in a mirror isn't it and that is very true. Andy had a huge personal connection to his are it helped him deal with all of his questions about life. It is almost like there is a quest to push all the limits of a subject to better understand it.

Apple The World s Most Valuable Brand - 986 Words

According to Forbes, Apple is the world s most valuable brand. Apple has been one of the most important leaders in innovation. Their products and services revolutionized technology and changed the way we interact with others. Although they are a successful company, they certainly have had different failures. This paper will discuss some of Apple’s successes, failures, culture and how Apple’s actions apply to the TCOs. Starting with the company’s success, I think that one of Apple’s big success was their company name. They chose to name the company â€Å"Apple†. At the time, computers were very expensive, large in size, and complicated to operate. A very few amount of people had the knowledge to operate computers when they first debuted.†¦show more content†¦It was very easy to move between playlist and singers, also the way that the volume control worked was new, innovated and brilliant. The click wheel helped users to become accustomed to convenience and depth at their fingertips 2. Apple presented something completely new, with a new concept, technology and it was really easy to use. Although Apple has been a successful company and a leader in innovation for years, they have had some failures with certain products and services. Apple Newton MessagePad was one of them. This devices was consider one of the first PDA. An Apple Newton was basically a handheld communications assistant with a touch-screen. One of the main features was to translate handwriting into text. For many user was consider ahead of its time. One of the main problems was that the built-in handwriting recognition system was accurate. It was not very accurate to translate handwriting. Another problem was the battery 3. It was poorly design so it ended up imposed restriction because the battery life was very short. Also, the Apple Newton was too large and very heavy. It was almost one pound. For these reasons this product had a short life. An Apple failure that I witnessed was Apple Maps. 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AnRead MoreDifferent Theoretical Concepts Of Orientations1120 Words   |  5 Pagesorientations in marketing followed by an attempt to compare and contrast the marketing orientations of two of the biggest companies in the world, namely Apple Inc., the number one most valuable brand in the world , valued at over $246 billion (BrandZ, 2015) and Foxconn Technology Group, a contract technology company producing the iPad and the iPhone for Apple (Wikipedia, 2015). Main Body Pickton (2014) highlights 6 different marketing orientations namely, production, product, sales, customer,Read MoreSamsung - Competitive Analysis1053 Words   |  5 PagesDiscussion issue 2: Since the early part of 2001, it has been notices that Samsung has been increasingly successful in repositioning the brand of its various products a higher level competing with market leaders like Sony and Apple. Research and find out how their advertising and promotion strategy was changed to achieve these objectives. 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The Ignudi of Michelangelos Sistine Chapel Frescoes

The Ignudi is the phrase coined by Michelangelo to describe the 20 seated male nudes he incorporated into the Sistine Chapel ceiling frescoes. These figures are interesting in that they do not fit the theme of the paintings, so their true meaning has been a mystery in the art world. Who Are the Ignudi? The word ignudi comes from the Italian adjective nudo, meaning naked. The singular form is ignudo. Michelangelo adopted the name The Ignudi for his 20 figures, giving it a new art-historical context. The youthful, athletic male figures are depicted in pairs of four. Each pair surrounds five center panels on the ceiling of the Sistine Chapel (there are nine panels in total). The ignudi appear on the panels: The Drunkenness of Noah, The Sacrifice of Noah, The Creation of Eve, The Separation of Land from Water, and The Separation of Light from Darkness. The ignudi  frame the biblical stories, one on each corner. A  pair of bronze-like medallions depicting scenes from the Old Testament rest between two of the figures along the outer edges. One of the medallions is left incomplete for unknown reasons. Each ignudo  is depicted in a relaxed pose that does not match the others. The figures are all seated and leaning on a variety of objects. In the earliest paintings, the ignudi  were in a similar pose to those in the same panel. By the time Michelangelo got to The Separation of Light from Darkness, the poses show no similarities. What Do the Ignudi Represent? Each ignudo represents the male human figure at its most idealized. They are painted in a sort of blending of ancient Classicism and modern naked superheroes (a topic about which Michelangelo could not have known). What adds to their intrigue is that none had anything at all to do with Bible stories. This leads people to question their meaning. Are they merely supporting characters in this detailed scene or do they represent something deeper? Michelangelo did not leave any clues as to the answer. Speculations include that the ignudi represent angels who oversaw the events depicted in the Bible scenes. Others believe that Michelangelo used the ignudi as representations of human perfection. Their physique is, after all, perfectly sculpted and their mannerisms have much more freedom than other figures in the frescoes. There is a possible meaning behind the objects surrounding the ignudi as well. Acorns are depicted with each ignudo  and many people believe these refer to Pope Julius II, Michelangelos patron. The pontiff was a member of the Della Rovere family as was his uncle Popes Sixtus IV who built the Sistine Chapel and for whom it was named. The Della Rovere name literally means of the Oak Tree and a tree is used on the Italian noble familys crest. The Controversy of the Ignudi One look at any of Michelangelos work in the Sistine Chapel reveals quite a bit of nudity. This was shocking to a number of people, including a pontiff or two. Its said that Pope Adrian VI did not enjoy the nudes whatsoever. When his papacy began in 1522, just ten years after the completion of the frescoes, he wanted them removed because he found the nudity vulgar. This did not come to fruition because he died in 1523 before any destruction could be done. Pope Pius IV did not target the ignudi specifically, but he did confront the chapels nudity. He had naked figures in The Last Judgment covered with fig leaves and loincloths to protect their decency. That occurred in the 1560s and during renovations to the artwork in the 1980s and 90s, restorers uncovered the figures to Michelangelos original state.