The Hecksher - Ohlin - Samuelson Theory revisited

Gérard Fuchs
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Gérard Fuchs: CECO - Laboratoire d'économétrie de l'École polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique

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Abstract: The framework of the paper is the HOS model completed by the addition of a progressive transition process to free trade and of a possible mobility between the two factors of production, chosen to be unskilled labour. Two objectifs are then pursued. The first objective, in the traditionnal approach of price adjustment, is to look at the role of redistribution of incomes to get at each stage a Pareto superior situation or at least, an "acceptable" situation, acceptability implying the support of a majority of agents. The second objective is to consider a "dual" approach, where adjustment takes place through unemployment and not adaptation of prices : then one considers what become the previous results. Both objectives intend to bring the HOS theory nearer to current disputes and reality : indeed free trade is never an achieved goal but a process leading to situations depending heavily on the path followed ; also we live in a world with many rigidities, especialy wage rigidities. The conclusion underline the importance of income redistribution and training policies for free trade to remain a desirable goal in the situations considered.

Keywords: Free trade; Transition process; Income redistribution; Mobility of labour; Libre échange; Processus de transition; Redistribution de revenus; Mobilité du travail (search for similar items in EconPapers)
Date: 2004
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