Factor price equalization theorem: the Philippine experience
Date
2009-03
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Abstract
This paper seeks to investigate whether the factor price equalization (FPE) theorem applies to the experience of the Philippines and its leading trading partners and to rank them as to whether they are high-wage or low-wage countries following the two-tiered analysis introduced by Mokhtari and Rassekh ( 1989).
The result of this study fails to show support to the FPE theorem and to its prediction that the Philippines, being a low-income country, will benefit from more trade openness as evidenced by an increase in real manufacturing wage.
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Keywords
Pricing, Price equalization theorem, Factor price equalization, International trade dynamics, Globalization