Extension of krugman’s comparative advantage model: Blessed fuels and cursed metals
<p>Krugman’s dynamic comparative advantage model deals with spending effect from resource dividends. In its original setup dividends from resource export result in higher relative wages and therefore the Home country loses its production share to the Foreign country. <br />The model had...
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| Format: | Article |
| Language: | English |
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Mongolian Academy of Sciences
2018-04-01
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| Series: | Proceedings of the Mongolian Academy of Sciences |
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| Online Access: | https://www.mongoliajol.info/index.php/PMAS/article/view/975 |
| _version_ | 1811234409890709504 |
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| author | Bayarmaa D |
| author_facet | Bayarmaa D |
| author_sort | Bayarmaa D |
| collection | DOAJ |
| description | <p>Krugman’s dynamic comparative advantage model deals with spending effect from resource dividends. In its original setup dividends from resource export result in higher relative wages and therefore the Home country loses its production share to the Foreign country. <br />The model had minor modifications so Home country has natural resources that can be either exported or used in production of traded goods. The learning is associated only with non-resource part of traded good production, and therefore the specialization range for resource producing country is narrower consequently it can easily lose it production share to Foreign country. As alternative to raw export the country can utilize its resources in production of traded goods. <br />In that case, it is possible to reduce relative wages through change in demand for imported traded goods. Compared to fuel exporters, metal exporters are more vulnerable to losing their production share, and metal processing countries are much stronger in keeping their shares in the world production. From extension of Krugman’s comparative advantage model it follows that existence of large resource extractive sector would result in loss of comparative advantage more easily compared with country that have small resource sector. <br />Distribution of resource wealth as pure transfers results in loss of domestic industries to foreign country. In contrast, utilizing resources as inputs and producing import substituting goods, while changing domestic demand preferences for traded and non-traded goods would have positive outcomes for the comparative advantage.</p> |
| first_indexed | 2024-04-12T11:35:45Z |
| format | Article |
| id | doaj.art-deff5823d79e4e64883fa2a742b34342 |
| institution | Directory Open Access Journal |
| issn | 2310-4716 2312-2994 |
| language | English |
| last_indexed | 2024-04-12T11:35:45Z |
| publishDate | 2018-04-01 |
| publisher | Mongolian Academy of Sciences |
| record_format | Article |
| series | Proceedings of the Mongolian Academy of Sciences |
| spelling | doaj.art-deff5823d79e4e64883fa2a742b343422022-12-22T03:34:50ZengMongolian Academy of SciencesProceedings of the Mongolian Academy of Sciences2310-47162312-29942018-04-015819310610.5564/pmas.v58i1.975928Extension of krugman’s comparative advantage model: Blessed fuels and cursed metalsBayarmaa D0School of Business Administration and Humanities Mongolian University of Science and Technology<p>Krugman’s dynamic comparative advantage model deals with spending effect from resource dividends. In its original setup dividends from resource export result in higher relative wages and therefore the Home country loses its production share to the Foreign country. <br />The model had minor modifications so Home country has natural resources that can be either exported or used in production of traded goods. The learning is associated only with non-resource part of traded good production, and therefore the specialization range for resource producing country is narrower consequently it can easily lose it production share to Foreign country. As alternative to raw export the country can utilize its resources in production of traded goods. <br />In that case, it is possible to reduce relative wages through change in demand for imported traded goods. Compared to fuel exporters, metal exporters are more vulnerable to losing their production share, and metal processing countries are much stronger in keeping their shares in the world production. From extension of Krugman’s comparative advantage model it follows that existence of large resource extractive sector would result in loss of comparative advantage more easily compared with country that have small resource sector. <br />Distribution of resource wealth as pure transfers results in loss of domestic industries to foreign country. In contrast, utilizing resources as inputs and producing import substituting goods, while changing domestic demand preferences for traded and non-traded goods would have positive outcomes for the comparative advantage.</p>https://www.mongoliajol.info/index.php/PMAS/article/view/975Dutch diseasenatural resourcesspecializationtraded goodsnon-traded goods |
| spellingShingle | Bayarmaa D Extension of krugman’s comparative advantage model: Blessed fuels and cursed metals Proceedings of the Mongolian Academy of Sciences Dutch disease natural resources specialization traded goods non-traded goods |
| title | Extension of krugman’s comparative advantage model: Blessed fuels and cursed metals |
| title_full | Extension of krugman’s comparative advantage model: Blessed fuels and cursed metals |
| title_fullStr | Extension of krugman’s comparative advantage model: Blessed fuels and cursed metals |
| title_full_unstemmed | Extension of krugman’s comparative advantage model: Blessed fuels and cursed metals |
| title_short | Extension of krugman’s comparative advantage model: Blessed fuels and cursed metals |
| title_sort | extension of krugman s comparative advantage model blessed fuels and cursed metals |
| topic | Dutch disease natural resources specialization traded goods non-traded goods |
| url | https://www.mongoliajol.info/index.php/PMAS/article/view/975 |
| work_keys_str_mv | AT bayarmaad extensionofkrugmanscomparativeadvantagemodelblessedfuelsandcursedmetals |