ECS4865
ASSIGNMENT 1 2025
UNIQUE NO.
DUE DATE: 30 MAY 2025
, ECS4865
Assignment 1 2025
Unique Number:
Due Date: 30 May 2025
Advanced International Economics
Question 1: Define specific factor and mobile factor. Explain why factor
specificity is not a permanent condition but is a matter of time.
A specific factor is one that is tied to a particular industry and cannot be easily
transferred to another sector in the short run. Examples include land used solely for
agriculture or machines designed for textile production. A mobile factor, such as labour,
can be employed in multiple sectors depending on relative wages and productivity. The
distinction is important in trade models, particularly the Specific Factors Model, where
sector-specific factors are fixed in the short term, while labour is free to move across
industries. However, factor specificity is not a permanent condition but is rather a matter
of time. Over the long run, capital can be repurposed, land can be reallocated, and
labour can acquire new skills, making formerly specific factors mobile. For instance,
machinery designed for one purpose may be modified or sold to another industry.
Similarly, land may shift from agriculture to industrial use. Technological advancements,
policy reforms, and structural economic changes can also influence factor mobility.
Therefore, while specificity matters in the short term, economic adjustment mechanisms
gradually reduce rigidities, enhancing mobility across sectors. This dynamic adjustment
is essential in understanding how economies respond to shocks such as trade
liberalisation.
ASSIGNMENT 1 2025
UNIQUE NO.
DUE DATE: 30 MAY 2025
, ECS4865
Assignment 1 2025
Unique Number:
Due Date: 30 May 2025
Advanced International Economics
Question 1: Define specific factor and mobile factor. Explain why factor
specificity is not a permanent condition but is a matter of time.
A specific factor is one that is tied to a particular industry and cannot be easily
transferred to another sector in the short run. Examples include land used solely for
agriculture or machines designed for textile production. A mobile factor, such as labour,
can be employed in multiple sectors depending on relative wages and productivity. The
distinction is important in trade models, particularly the Specific Factors Model, where
sector-specific factors are fixed in the short term, while labour is free to move across
industries. However, factor specificity is not a permanent condition but is rather a matter
of time. Over the long run, capital can be repurposed, land can be reallocated, and
labour can acquire new skills, making formerly specific factors mobile. For instance,
machinery designed for one purpose may be modified or sold to another industry.
Similarly, land may shift from agriculture to industrial use. Technological advancements,
policy reforms, and structural economic changes can also influence factor mobility.
Therefore, while specificity matters in the short term, economic adjustment mechanisms
gradually reduce rigidities, enhancing mobility across sectors. This dynamic adjustment
is essential in understanding how economies respond to shocks such as trade
liberalisation.
