Question
Suppose the world is a Heckscher-Ohlin model with two factors of production, skilled and unskilled labor, and many countries that differ in their ratio of
Suppose the world is a Heckscher-Ohlin model with two factors of production, skilled and unskilled labor, and many countries that differ in their ratio of skilled to unskilled workers. Suppose that in each country trade policy is determined by the need to keep unskilled workers happy, because in each country unskilled workers form a majority of the population and as a result only politicians who do what unskilled workers want will win an election. Each country's government must choose between free trade and protectionism. Assuming that each voter votes for the politician whose policies will give that voter the highest real income, which countries will have protectionist policies? Which will have free trade?
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