factor endowment


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Factor Endowment

The means of production (namely land, labor, capital and sometimes entrepreneurship) contained in an area. In general, greater factor endowment portends greater economic success. However, some resource-poor countries and regions become successful simply by efficient use of the little factor endowment they have.

factor endowment

the FACTORS OF PRODUCTION that a country has available to produce goods and services. The size and quality of a country's resource base (natural resources, labour and capital) determine the amount of goods and services it can produce (see GROSS NATIONAL PRODUCT) and the rate at which it can raise living standards over time (see ECONOMIC GROWTH). Differences between countries in terms of the availability and sophistication of their resource inputs provide an incentive for them to engage in INTERNATIONAL TRADE in order to obtain products that they cannot make efficiently for themselves.
References in periodicals archive ?
In his 2008 article, Vass addressed the relationship between an increase in a region's factor endowment of venture capital and regional rates of innovation.
The trade literature has established that while a rise in a factor endowment must benefit a small open economy, it may hurt a large nation because of terms-of-trade effects.
Furthermore, the manufacturing capabilities of these countries are not determined by factor endowment.
This deficiency in factor endowment theory caused substantial literature to emerge attempting to explain the new trend in international specialization and trade pattern.
In Eastern Europe the share of area under corporate farms ten years after the transition, ranged from 90 per cent in Slovakia, to 60 per cent in Kazakhstan, and 45 per cent in Russia (but less than 10 per cent in Albania, Latvia, and Slovenia), reflecting countries' factor endowment, institutional structure, and the way the reforms were implemented.
2) Second, outsourcing in unskilled-labor-intensive processing occurs because of factor endowment differences.
China's current, counterintuitive to some, dangerous predicament with excess savings and investment can be better understood by recalling the fundamental economic principles of increases in factor endowment, growth, and trade.
e] = index of level of efficiency with which the available factor endowment is allocated (productivity effect or competitive advantage);
0% Table 5 Management Fees Charged by Professional Managers Number of Endowment Fees(Basis Points) Funds Reporting 25-50 30 50-75 56 100-125 11 125-150 2 Over 150 4 Total 103 Table 6 Relationship of Size of Portfolio and Management Fees Number of Respondents Reporting (Basis Points Charged) Portfolio Size 25-50 50-75 100-125 125-150 150+ Less that $500,000 2 $500,000 - $1 Million 2 $1 - $5 Million 2 1 1 $20 - $50 Million 1 1 $50 - $100 Million 8 5 4 Over $100M 15 49 6 2 4 Total 30 56 11 2 4 Table 7 Reasons Cited for Custodian Selection Number (Percentage) of Factor Endowment Funds Reporting (1) Cost 63 24.
One extreme, from a theoretical standpoint, is typified by a Heckscher-Ohlin-Samuelson world in which all transactions are conducted in a perfectly competitive environment, which is a variant of the factor endowment explanation of trade.
Therefore, the effects of factor endowments can be found by either (a) removing factor endowment differences across countries or (b) removing factor intensity differences across industries.
He developed a simple model that can give a unified account of intra-industry trade and inter-industry trade, and the striking feature of the model was that intra-industry trade attains a maximum at a point where countries have identical factor endowment ratios.