The Location of Comparative Advantages on the Basis of Fundamentals Only

Pierre Mohnen and Thijs ten Raa

CIRANO Working Papers from CIRANO

Abstract: We locate the comparative advantages of Canada and Europe on the basis of their fundamentals only: endowments, technologies, and preferences. A linear program with an input-output core and an algorith for the balance of payments constraint will determine the efficient allocation of resources. The supporting allocations determine the optimum pattern of trade. The Canadian advantage compared to Europe is in minerals, machines and clothing & footwear. Gains to free bilateral trade are estimated to be negligible for the big economy, Europe, but significant for the small one, Canada. The pattern of comparative advantage persists when we allowfor free access to technology and consumption coefficients and, therefore, can be ascribed to the endowments. Nous détectons les avantages comparatifs au Canada et en Europe à partir des éléments fondamentaux d'une économie : les dotations, les technologies et les préférences. Par la programmation linéaire, en utilisant les tableaux entrée-sortie et un algorithme servant à imposer l'équilibre de la balance commerciale, nous déterminons l'allocation optimale des ressources, qui sous-tend les échanges optimaux. Le Canada a un avantage comparatif par rapport à l'Europe dans les miéraux, la machineries, les vêtements et les chaussures. Les gains à l'échange sont minimes pour la grande économie, l'Europe,0501s substantiels pour le petit pays, le Canada. La structure des avantages comparatifs persiste quand nous permettons le libre choix entre les technologies et les préférences des deux pays. Les dotations ressortent donc comme étant le facteur déterminant de la structure des avantages comparatifs.

Keywords: Comparative advantage; Gains to free trade; Avantages comparatifs; gains au libre-échange (search for similar items in EconPapers)
JEL-codes: F10 (search for similar items in EconPapers)
Date: 1997-02-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Chapter: The Location of Comparative Advantages on the Basis of Fundamentals Only (2009)
Journal Article: The Location of Comparative Advantages on the Basis of Fundamentals Only (2001)
Working Paper: The location of comparative advantages on the basis of fundamentals only (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:cir:cirwor:97s-07

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