Unequal Exchange

–International Trade, Capital Movement, Diminishing Harvest, and Partial Specialization–

Abstract

Arghiri Emmanuel criticized and reconstructed Ricardo's trade theory, and concluded that the imposition of international division of labor leads to the exploitation of developing countries by developed countries. This paper reconsiders his conclusions using the Sraffa system. In the Ricardo-Marx type model, the primary factor of production was only labor. Therefore, in the second half of the paper, we construct a model that considers not only labor but also capital and land as the original factors of production, and examine the impact of trade and international capital movement on developed and developing countries.