Modern Comparative Advantage If price of wheat falls Rents fa‖l Money wages fall(cheaper wheat)while real wages remain constant Increased profits Greater accumulation Objective: promote growth by redistributing income Neoclassical Heckschler-Ohlin-Samuelson trade mode Exclusively static Therefore ignores income distribution hence growth Issue Basic theory by Heckscher, Ohlin, Samuelson, Vanek Best shown using"Edgeworth Box"analysisModern Comparative Advantage • If price of wheat falls – Rents fall – Money wages fall (cheaper wheat) while real wages remain constant – Increased profits – Greater accumulation – Objective: promote growth by redistributing income • Neoclassical Heckschler-Ohlin-Samuelson trade model – Exclusively static – Therefore ignores income distribution & hence growth issue – Basic theory by Heckscher, Ohlin, Samuelson, Vanek – Best shown using “Edgeworth Box” analysis: