Questions:
Question 1: The Ricardian Model of international trade is extremely useful for thinking about the reasons why trade may occur among countries. Despite its usefulness, the Ricardian Model is over-simplified and could potentially lead to misleading predictions. The Specific Factors Model in so many ways overcome the limitations of the Ricardian Model. Yet, the Specific Factors Model also has several limitations.
a. Briefly discuss two limitations of the Specific Factors Model? In what ways does the Hecksher-Ohlin Model complement tire Specific Factors Model?
b. Suppose you are interested in examining the impact of international trade on income distribution in the United States between workers and capitalists, would you use the Specific Factors Model or the Hecksher-Ohlin model? Why? Discuss two reasons.
Question 2: Given that Import Substitution Industrialization (ISI) and Export-Oriented industrialization (EOI) did not work in Latin America and Africa, what industrialization strategy win you recommend to these Iwo regions?
a. In your own words, define ISI and EOI.
B. Briefly explain why ISI failed in Latin America and Africa. Cite your sources.
c. Briefly explain why EOI failed in Latin America and Africa. Cite your sources.
d. Based on your answers to Parts (a), (b) and (c), discuss your newly proposed industrialization strategy for the two regions.