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According to the Wall Street Journal ( August 3 0 , 2 0 0 7 , In the Balance ) , it takes about
According to the Wall Street Journal August In the Balance" it takes about hours to assemble a vehicle in the United States. Let's use that fact plus a few invented numbers to sum up the global division of labor in auto manufacturing. In international economics, "North" is shorthand for the hightech developed countries of East Asia, North America, and Western Europe, while "South" is shorthand for the rest of the world. Let's use that shorthand here.
One million hours of labor are available for making cars in the North, and another million hours of labor are available for making cars in the South.
In a notrade world, let's assume that twothirds of the auto industry labor in each region is used to make highquality cars and onethird is used to make lowquality cars. Solve for how many of each kind of car will be produced in North and South, and add up to determine total global output of each type of car. Why will both kinds of cars be made? Because the lowquality cars will be less expensive.
Output of highquality cars in the
Number of Hours to Make One HighQuality Car North South Number of Hours to Make One LowQuality Car
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