Fragmentation of Production, Comparative Advantage, and the Heckscher-Ohlin Theory

Figures & data

Table

One unit of:	North	South
Machinery …	$400	¥1000
Apparel …	$200	¥250

Figure 1. The Lerner-Pearce diagram.

Source: Own elaboration based on Leamer (1995).

Figure 2. North and South isocosts lines under autarky.

Source: Own elaboration.

Figure 3. Break down of a finished good’s factor-input coefficient.

Source: Own elaboration.

Figure 4. Free trade equilibrium without fragmentation.

Source: Own elaboration based on Jones and Kierzkowski (2001).

Table

	Good 1	Good 2	Input 3
Input 3	$1$	$1$	$0$
Skilled labour	$a_{H1}=1$	$a_{H2}=2$	$a_{H3}=3$
Unskilled labour	$a_{L1}=2$	$a_{H2}=1$	$a_{L3}=1$

Table

	Good 1	Good 2	Task 1	Task 2	Input 3
Task 1	$1$	$0$	$0$	$0$	$0$
Task 2	$0$	$1$	$0$	$0$	$0$
Input 3	$1$	$1$	$0$	$0$	$0$
Skilled labour	$0$	$0$	$a_{H1}=1$	$a_{H2}=2$	$a_{H3}=3$
Unsk’d labour	$0$	$0$	$a_{L1}=2$	$a_{H2}=1$	$a_{L3}=1$

Figure 5. Trade pattern reversal with trade in intermediate inputs and free capital mobility.

Source: Own elaboration based on Deardorff (1979).

Leamer, E. 1995. The Heckscher-Ohlin Model in Theory and Practice. Princeton, NJ: Princeton Studies in International Finance, 77.

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Jones, R. W., and H. Kierzkowski. 2001. ‘A Framework for Fragmentation.’ In Fragmentation, edited by S. W. Arndt, and H. Kierzkowski. New York: Oxford University Press.

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Deardorff, A. V. 1979. ‘Weak Links in the Chain of Comparative Advantage.’ Journal of International Economics 9 (2): 197–209.

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