What Is a Factor Endowment?
The conditional theory of factors (: refers to the determination of industrial location and interregional trade, different regions carry out commodity production and commodity exchange according to their natural resource advantages. Swedish economist Olin first proposed this theory.
Conditionalism
Right!
- Chinese name
- Conditionalism
- Foreign name
- Factor Endowmeat theory
- Presenter
- Olin
- Related
- Industrial location and interregional trade
- The conditional theory of factors (: refers to the determination of industrial location and interregional trade, different regions carry out commodity production and commodity exchange according to their natural resource advantages. Swedish economist Olin first proposed this theory.
- The conditional theory of factors based on the "comparative cost theory" of Adam Smith and David Ricardo is an important theoretical basis for regional comparative interests and regional specialization.
- argument
- Olin believes that due to the different endowments of production factors in various countries and regions, some production factors are relatively abundant and some are scarce. Therefore, different countries and regions use the production factors that are in their favor to produce and export goods, while inputting those that need to be used. Scarce factors of production to produce goods. Internationally and even regionally, factors of production may not be able to flow freely, so factor prices may not be consistent in different markets. This difference will inevitably lead to trade between different countries and regions, and determine the formation of industrial locations within the international scope and between regions.
- In short, the relative abundance of production factors in various regions of the country is the decisive factor for the formation of industrial locations. For example, in areas with many people but lack of capital, it is more advantageous to develop labor-intensive industries. Conversely, in areas with high labor costs and abundant capital and technological elements, it is appropriate to develop capital-intensive and technology-intensive industries.