Exhaustible Resources and the Dynamics of Comparative Advantage

This paper examines the relationship between factor endowments and the pattern of trade when one of the factors is an exhaustible resource. Differences in the rate of time preference between countries determine the direction of trade, however, the length of the period over which each country exports the resource is directly related to the ratio of its own resource endowment to that of its trading parter. The labor endowments of the two countries influence only the volume of trade.