Technology, endowments, and the factor content of bilateral trade

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

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Author(s)

Detail(s)

Original languageEnglish
Pages (from-to)389-409
Journal / PublicationJournal of International Economics
Volume71
Issue number2
Online published20 Oct 2006
Publication statusPublished - Apr 2007
Externally publishedYes

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. © 2006 Elsevier B.V. All rights reserved.

Research Area(s)

  • Factor content of bilateral trade, Heckscher-Ohlin model, Ricardian technology differences

Citation Format(s)

Technology, endowments, and the factor content of bilateral trade. / Lai, Huiwen; Zhu, Susan Chun.
In: Journal of International Economics, Vol. 71, No. 2, 04.2007, p. 389-409.

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review