Technology, endowments, and the factor content of bilateral trade

Huiwen Lai, Susan Chun Zhu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

18 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)389-409
Number of pages21
JournalJournal of International Economics
Volume71
Issue number2
DOIs
Publication statusPublished - 1 Apr 2007
Externally publishedYes

Keywords

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

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

Cite this