balassa samuelson effect This is a topic that many people are looking for. newyorkcityvoices.org is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, newyorkcityvoices.org would like to introduce to you Bela Balassa. Following along are instructions in the video below:
“Balassa was an important development neconomist. Who was born in hungary in 1928 and who who passed away in 1991. He fled hungary after the 1956 nanti communist revolt and to the united states. He taught for a long time at njohns hopkins university.
And did a great deal of work for nthe world bank. I m very pleased to have known nbela s wife. Carol balassa. Who is a wonderful companion and nwho has been a friend of mine.
Let s now talk about bela balassa s ngreatest contribution to economic thought bela balassa. Wanted to nexplain why services are more expensive in some countries nthan in other countries. For instance. If you are in norway.
A typical haircut costs about 65 nwhich of course is very expensive. If you are in mexico. It is not difficult nto get a good haircut for 5 or less. Which of course is nnot nearly as expensive.
What might account for this difference. This was one of the questions nthat drove bela balassa. He concluded that it had a great ndeal to do with labor productivity..
So labor overall was more nproductive in norway than in mexico in most economic sectors. Norway is a richer country nthat has a higher standard of living. It is better geared up for nproductive business for export. So imagine that we have barbers nin.
Mexico and barbers in norway to get a barber to work in norway. Nwell that barber or potential barber has the option of earning a lot more money in nsome. Other sector. Say the oil sector.
Whereas. A barber in mexico ndoes. N t have the same or comparable options to earn a lot nof money in other sectors cuz. The other sectors in mexico nare not nearly as productive.
If you look for instance at oil ncompanies in norway compared to mexico in norway. The sector is more efficient in mexico in the oil company. The state company pemex. There is more npolitical patronage costs are higher.
They re not nearly as good at nexploration and discovery. They re not as good at marketing and that s all an indication of nthe inefficiency in the mexican economy. Now how does this all nrelate back to barbers when you look at barbers barbers in mexico are actually about nas productive as barbers in norway..
It s not like working in the oil sector. Where norway is more nproductive than mexico if you go to a barber in mexico. The basic ntechnology is scissors comb and razor. If you go to a barber in norway.
The basic ntechnology is scissors comb and razor. So there s a productivity equality for nthe barbers across norway and mexico. But in other sectors. Like oil.
Nthere s greater productivity in norway. That means that the payment for norwegian barbers has to be higher to get nthem to do the work of cutting your hair and it means that if you re a tourist nlet s say you re travelling you re taking a trip to norway. Nyou re taking a trip to mexico in which country should nyou get your hair cut of course nyou should get your hair cut in mexico of course. Nthis is not only a story about barbers.
It is also a story of personal servants. So it is common in mexico for a middle or upper middle class family to nemploy some number of servants. It is not equally common in norway for na middle class family to employ servants. Why is that it s the same reasoning.
All over again norwegian labor is more nproductive in some sectors. So to hire that labor to work for nyou as a personal servant or as a barber nit s simply going to cost more money so there are some sectors such as nbarbering or personal servants. Where the productivity across nations nreally doesn t vary all that much because it s the same technology nbasically similar production methods and in those cases..
The poorer ncountries will produce those services much more cheaply than you nwill find them produced and sold in the wealthier countries. Such nas. Norway or the united states. One implication of balassa s thesis nis that a lot of poorer countries may be somewhat wealthier than nthe.
Published statistic indicate why is that well it s the case that nin. These poorer countries. A lot of services have very low prices. So the standard of living may be nsomewhat higher than a quick crude or naive look at nthe numbers would indicate so just to sum up what nare.
The lessons behind balassa s theory about exchange rates and relative prices. One get your hair cut nin. Poorer countries. Two if you live in a poorer country.
You are more likely to nemploy personal servants. Three the theoretical point. There is nsome sectors. Where wealthier countries are much more productive and other sectors nwhere.
The wealthier countries such as norway. Really aren t more productive nat. All such as barbering..
Four be very careful about using economic statistics. Because countries ndiffer in many ways and in some ways. Poorer countries. Nhave cheaper services for people to be able to afford b.
La. Balassa. Had other contributions. He wrote a wonderful book on neconomic integration in europe.
He also was well known for nwriting actually a dining guide to paris. Which he circulated to nmany other economists. But this is belassa s nbest known contribution. It also comes from some work nfrom.
Other important economists such as paul samuelson and roy harrod. But that in a nutshell is why nbella balassa is an important development. ” ..
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