Heckscher-Ohlin theory: Winners and losers from globalization

Economic Essay Questions
Name Course Instructor Date
Part A: Essay questions (15 points)
Use the concepts studied in class and during the lectures to answer the following questions. Do not hesitate to include material you may have learned outside of the course if it is pertinent. Provide structured arguments that show the thinking process you have gone through to arrive to the position you will be stating.
Question 1. According to the Heckscher-Ohlin theory, who are the winners and the losers from globalization?
The Heckscher-Ohlin model shows that comparative advantage is determined by the interaction between a country's resources, the relative abundance of factors of production, and technology. This is a factor endowment theory that emphasizes patterns of specialization and trade where differences in international trade are explained by differences in the countries' resources besides labor productivity. The winners are those who utilize the factors of production to gain a competitive advantage such as China using cheap labor and increased capital investments to improve manufacturing. The relative costs of land, capital and labor are high in the US, and this has put the US at a disadvantage even as there is technology and industry production. In a globalized world, there has been growth in the export of capital and labor-intensive manufactured goods. The developing countries have lost out the most even as they have chap labor as they have failed to improve their productive capacities.
Question 2. Why do private markets generally supply insufficient amounts of public goods? (Hint: define what a public good is. Use the concept of externalities) (4 points)
A public good is a commodity whose consumption...