ECON 2200 Lecture Notes - Lecture 26: Factor Endowment, Comparative Advantage, Nominal Interest Rate
14 May 2018
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ECON 2200
Lecture 26
• Regional Specialization reflects factor endowment and comparative
advantage; also reflects decreased transport costs. However, this
was not a good thing for farmers.
• Farmers exported excess goods to other countries
o Export in 1870 was $297 million; in 1900 was greater than $840
million
• Made farmers: less self-sufficient
o More reliant on markets
▪ As buyers and sellers: domestic market and international
market
• Consumer goods (anything they didn’t produce for
themselves they had to buy)
• Farm Equipment (these were often bought on
credit)
• Land (these were often bought on credit)
o More reliant on transportation (RR) – must be able to transport
goods
▪ Transportation important both for good bought (shipped
in) and goods sold (shipped out)
o More vulnerable to price fluctuations
▪ The more specialized you are, the more vulnerable you
are to price changes.
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