Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
962898 | Journal of International Economics | 2007 | 21 Pages |
Abstract
We derive testable restrictions relating the factor content of bilateral trade to bilateral differences in technology and endowments. This departs from the Heckscher-Ohlin-Vanek theorem which compares the factor content of net trade with factor abundance. We test the theoretical restrictions using a unique dataset that covers 41 developed and developing countries with disparate endowments and technology. We find evidence supporting the predictions. In addition: (1) The factor content predictions perform best for country pairs with larger endowment differences, and (2) for trade between capital-abundant countries, Ricardian international technology differences matter more than Heckscher-Ohlin factor endowment differences.
Keywords
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Economics and Econometrics
Authors
Huiwen Lai, Susan Chun Zhu,