Heckscher-Ohlin model question
Suppose Russia starts from USSR autarky and opens to trade. It imports automobiles, a capital-intensive good.
· Based upon your expectations from Heckscher-Ohlin model, is Russia capital-abundant or labour-abundant? Explain.
· What is the impact of opening for trade on the real wage in Russia? Explain.
· What is the impact of opening for trade on the price of capital in Russia? Explain.
· Who, workers or capital owners, would lobby for policies to limit free trade? Explain why.
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