The Ricardo Viner model, also known as the specific factors model, argues that trade policy preferences are determined by industry-specific factors rather than the overall comparative advantage of a country (Wein, 2013). According to this model, firms in different industries have different trade policy preferences based on their specific factors of production, such as capital, labor, and land (Wein, 2013).
Key Facts
- The Ricardo Viner model, also known as the specific factors model, argues that trade policy preferences are determined by industry-specific factors rather than the overall comparative advantage of a country.
- According to this model, firms in different industries have different trade policy preferences based on their specific factors of production, such as capital, labor, and land.
- Export-oriented firms, which rely heavily on exports for their business, are more likely to support free trade and open trade policies. This is because they benefit from access to foreign markets and the ability to compete globally.
- Import-competing firms, on the other hand, are more likely to oppose free trade and advocate for protectionist measures. These firms face competition from foreign imports and may argue for trade barriers to protect their domestic market share.
- The trade policy preferences of firms are also influenced by the overall trade openness of their country. As trade openness increases, export-oriented firms are more likely to support their country’s trade policy, while import-competing firms are more likely to oppose it.
- The Ricardo Viner model suggests that trade policy preferences are not solely determined by the overall economic interests of a country, but rather by the specific interests of firms within different industries.
Export-Oriented Firms
Export-oriented firms, which rely heavily on exports for their business, are more likely to support free trade and open trade policies (Wein, 2013). This is because they benefit from access to foreign markets and the ability to compete globally (Wein, 2013).
Import-Competing Firms
Import-competing firms, on the other hand, are more likely to oppose free trade and advocate for protectionist measures (Wein, 2013). These firms face competition from foreign imports and may argue for trade barriers to protect their domestic market share (Wein, 2013).
Trade Openness
The trade policy preferences of firms are also influenced by the overall trade openness of their country (Wein, 2013). As trade openness increases, export-oriented firms are more likely to support their country’s trade policy, while import-competing firms are more likely to oppose it (Wein, 2013).
Conclusion
The Ricardo Viner model suggests that trade policy preferences are not solely determined by the overall economic interests of a country, but rather by the specific interests of firms within different industries (Wein, 2013). This model provides a more nuanced understanding of the political economy of trade policy and helps to explain why different groups within a country may have different views on trade policy.
References
Wein, M. (2013). What Determines Firm Trade Policy Preferences? Georgetown University Institutional Repository. https://repository.library.georgetown.edu/handle/10822/558599
FAQs
What is the Ricardo Viner model?
The Ricardo Viner model, also known as the specific factors model, argues that trade policy preferences are determined by industry-specific factors rather than the overall comparative advantage of a country.
What are some examples of industry-specific factors that can influence trade policy preferences?
Examples of industry-specific factors that can influence trade policy preferences include the capital intensity of production, the skill level of labor, and the availability of natural resources.
How do export-oriented firms differ from import-competing firms in terms of their trade policy preferences?
Export-oriented firms are more likely to support free trade and open trade policies because they benefit from access to foreign markets and the ability to compete globally. Import-competing firms, on the other hand, are more likely to oppose free trade and advocate for protectionist measures because they face competition from foreign imports.
How does trade openness affect the trade policy preferences of firms?
As trade openness increases, export-oriented firms are more likely to support their country’s trade policy, while import-competing firms are more likely to oppose it.
What are some of the implications of the Ricardo Viner model for the political economy of trade policy?
The Ricardo Viner model suggests that trade policy preferences are not solely determined by the overall economic interests of a country, but rather by the specific interests of firms within different industries. This model helps to explain why different groups within a country may have different views on trade policy.
How can the Ricardo Viner model be used to explain the political dynamics of trade policy?
The Ricardo Viner model can be used to explain why certain industries and firms are more likely to support or oppose trade liberalization. For example, export-oriented industries are more likely to support trade liberalization because it expands their market access, while import-competing industries are more likely to oppose trade liberalization because it increases competition.
What are some of the limitations of the Ricardo Viner model?
One limitation of the Ricardo Viner model is that it does not take into account the role of governments in shaping trade policy. Governments may have their own political and economic objectives that influence their trade policy decisions, regardless of the preferences of firms. Additionally, the model does not consider the potential welfare effects of trade policy on consumers and society as a whole.