Factor Endowments and Comparative Advantages of East Asia

Tri Widodo ()

Economics and Finance in Indonesia, 2008, vol. 56, 215-241

Abstract: Factor endowments play important roles in international trade. Firstly, this paper describes the Heckscher-Ohlin theory in the general equilibrium (GE) framework. Secondly, this paper examines two crucial assumptions in the Heckscher-Ohlin (H-O) theory i.e. assumptions on production (technology) and consumption (tastes and preferences). Thirdly, this paper examines the comparative advantage of East Asian countries, which have large discrepancies in the factor endowments. By applying Revealed Symmetric Comparative (RSCA) index, this paper concludes that China, Indonesia and Thailand have comparative advantage in unskilled labor-intensive industries, meanwhile only Japan has comparative advantage in technology-intensive industries for the last two decades. The shifts in comparative advantage strongly support “flying geese” paradigm in East Asia.

Keywords: Factor Endowments; Factor Intensity; Comparative Advantage (search for similar items in EconPapers)
JEL-codes: F14 F17 (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:lpe:efijnl:200811

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