Heckscher-Ohlin in Theory and Reality

Most economists think that H-O works well in theory, but badly in reality, whereas the opposite is closer to the truth. After a long decline, H-O has recently experienced an empirical revival, but the standard Samuelsonian formalisation of the theory is still unsatisfactory. A modified formalisation of the theory, which gives trade costs more of a role, fits the evidence better. Appropriately interpreted, H-O is a useful part of the theory of economic development, as well as of international trade.

Looking ahead optimally in allocating aid

The Collier-Dollar approach to aid allocation has been less than fully embraced by donors – even those focused on poverty reduction – and has come into conflict with a different approach based on the Millennium Development Goals. These two approaches are shown to be special cases of a more general model of optimal aid allocation, in which donors care about future as well as current poverty. The model is illustratively applied to data for developing regions. Adding a poverty decline adjustment to the allocation formulae now used by aid agencies would make these formulae more efficient and more acceptable.

A more general Heckscher-Ohlin model

This paper formalises the enduring insights of Heckscher and Ohlin in a way that avoids the two least satisfactory features of the standard Heckscher-Ohlin-Samuelson model, namely that in an open economy factor prices are unaffected by endowments or demand and that outcomes vary drastically with the assumed numbers of goods and factors. Its main innovation is to recognise that (and describe simply how) trade costs diminish the economic impact of differences between places in relative production costs, a point relevant also to other models of trade. The Heckscher-Ohlin-Samuelson model is a special case of the more general model.

A practical Heckscher-Ohlin model

This paper offers a formalisation of the insights of Heckscher and Ohlin that is more consistent with the evidence than standard models, and simple enough to be used for teaching and policy analysis, as well as for research. It describes both the effects of a country's factor endowments on the commodity composition of its trade and the effects of trade-related changes in goods prices on factor prices. The model applies to any numbers of goods or factors. Trade costs, including policy barriers, play a central role in the model, especially by reducing elasticities of demand.

Has China de-industrialised other developing countries?

China's opening to trade is interpreted as a shift in world average factor endowments, which altered the comparative advantage of other countries. In the rest of the world on average, this shift reduced the ratio of labour-intensive manufacturing to primary production by 7-10% for output and 10-15% for exports. China's impact is clearest on East Asian countries: in other developing regions, it was swamped by other causes of structural change. The de-industrialising effect was significant, but not big enough to be a serious threat to growth or equity in most other developing countries

Internet gambling: an overview of psychosocial impacts

Technological innovation has always played a role in the development of gambling behaviour, primarily through providing new market opportunities. Early prevalence studies of Intemet gambling in the UK, Canada and the US have shown that Intemet gambling is not a eause for concern at present. However, this seems likely to change as more people start to use the Internet for leisure activities. After a brief overview of gambling technologies and deregulation issues, this paper examines the impact of technology on gambling by highlighting salient factors in the rise of Intemet gambling (i.e., accessibility, affordability, anonymity, convenience, escape immersion/dissociation, disinhibition, event frequency, asociability, interactivity, and simulation). The paper also overviews some of the main social impacts surrounding Intemet gambling, such as protection of the vulnerable, Intemet gambling in the workplace, electronic cash, and unscrupulous operators. Recommendations for Internet gambling operators are also provided

Value Chains

Summaries This article starts by reviewing what economists can learn from work on value chains by other social scientists, and then considers what economics may have to offer both in understanding value chains and in designing policies related to them. In terms of economic accounting, the article reviews the connections between value chains and input?output tables, between the well?being of firms and of people, and between real wages and money wages. In terms of economic causation, it explores the relevance to value?chain analysis of two theories of comparative advantage. It also asks about the circumstances in which government intervention to upgrade firms would benefit a country's unskilled workers or could be justified on economic grounds

Internet Gambling: An Overview of Psychosocial Impacts

Technological innovation has always played a role in the development of gambling behaviour, primarily through providing new market opportunities. Early prevalence studies of Internet gambling in the UK, Canada and the US have shown that Internet gambling is not a cause for concern at present However, this seems likely to change as more people start to use the Internet for leisure activities. After a brief overview of gambling technologies and deregulation issues, this paper examines the impact of technology on gambling by highlighting salient factors in the rise of Internet gambling (i.e., accessibility, affordability, anonymity, convenience, escape immersion/dissociation, disinhibition, event frequency, asociability, interactivity, and simulation). The paper also overviews some of the main social impacts surrounding Internet gambling, such as protection of the vulnerable, Internet gambling in the workplace, electronic cash, and unscrupulous operators. Recommendations for Internet gambling operators are also provided