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HOV theory to be supported by South African data may be due to the restrictive underlying assumptions of the theory and pointed out by Maskusii (1985) after be noted that the HOV model was not supported by his findings. Hakura (1999) and Davis and Weinstein (2001) went further to specifically point out that the restrictive assumption of similar technology across countries might be the cause of such failures. Other important factor pointed out by Schott (2004) which might explain the failure of HOV theory to apply might the due to imperfect competition, productivity differences and consumers love of variety, hence a multiple cone set up rather than a single cone. These factors will enable a country to specialise and move within different cones producing unique varying goods.

 

A deeper and closer analysis of South Africa’s capital-labour ratio and skilled-unskilled ration of consumption and net trade shows a striking and disturbing fact. Since 1980 to 2000 these ratios have been rising, meaning that more capital and skilled labour is being used in South Africa’s production as compared to unskilled labour. This is not a good trend given the massive unemployment rates, especially among the unskilled people and one wonders what will happen if the ratios continue to increase. With the end of apartheid and two elections by 2000 won by ANC, one could have expected to see more tangible policies promoting job creation for the once marginalised and unskilled population groups. As for firms they might be justified to invest more in capital intensive projects than try to rely on labour as South African labour is highly expensive relative to most of its trading partners. With trade liberalisation and increased trade, firms are faced with increased competition hence the need to find ways to cut costs to be competitive. The high costs associated with South African labour may be the main reason why South Africa has failed to enjoy the comparative advantage associated to its labour abundant endowments as suggested by the HOV model. Due to the high cost of labour South Africa end up revealing itself as a capital abundant nation, exporting relatively capital intensively produced goods.

 

Commodity Composition Approach (CCA).

 

Using the CCA will present results based on general OLS first for a particular year then perform a pooled OLS for all the years. The cross-sectional pooled OLS results for each year enabled to have a bigger sample which gives us more precise results as compared to single year results. Our OLS and pooled OLS results are also likely to be biased mainly because factor endowments explain partially the patterns of trade across countries and over time. They are observable or unobservable variables left out, for example, specialisation is also determined by domestic infrastructure, domestic institutions, schooling, and macroeconomic volatility. Some unobserved factors like productivity are also important as noted by Hall and Jones (1995). To ensure that we do not get biased results due to these factors we control for industry and cross country variations and as well as control for unobserved differences by usin本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。