Energy security and international competitiveness are two of the most fiercely discussed topics - especially in the light of the European Union (EU)'s dependence on Russia's gas, oil, and coal. Both mentioned concepts are of special importance for the so-called EU new member states (EU NMS),...

The factor proportions model, also known as the Heckscher-Ohlin model, is the main neoclassical model of international trade theory. It was developed by Swedish economists Eli Heckscher and Bertil Ohlin in 1920s and 1930s. According to the factor proportions model a country should specialize in...

We incorporate demand-side considerations in trade in a systematic but straightforward way. We do so by focusing on the role of inequality in the determination of trade flows and patterns. With nonhomothetic preferences, when countries are similar in all respects but asset inequality, we find...

Motivated by increasing trade and fragmentation of production across countries, accompanied by income convergence by many emerging economies, we build a dynamic two-country model featuring sequential, multi-stage production and capital accumulation. As trade costs decline over time,...

A half-century of empirical work on the factor proportions theory has identified devise simple amendments that bring theory and data into reasonable congruence. Our study considers standard and novel hypotheses regarding the failures of the Heckscher-Ohlin-Vanek formulation and is the first to...

Motivated by increasing trade and fragmentation of production across countries since World War II, we build a dynamic two-country model featuring sequential, multistage production and capital accumulation. As trade costs decline over time, global-value-chain (GVC) trade expands across countries,...

The paper aims at empirically validating the inter relations between changing factor endowment, structure of trade and Indian economy. Heckscher-Ohlin theory of international trade envisages that a country specialises in the production and export of such goods as conform to its factor endowment....

Structural transformation supports higher output growth if it reflects the endowment fundamentals of the economy. Since the industrial structure is expected to align with factor- intensive sectors, structural coherence with factor proportions becomes an important consideration for industrial...

This paper revisits the Heckscher-Ohlin-Vanek (HOV) theorem and investigates its fit for digital tasks and ICT capital, which both represent endowment factors that are expected to shape the digital transformation. We use a theory-consistent methodology for calculating the measured net factor...

Purpose Research based on Bangladesh-US trade data examines the Heckscher-Ohlin model and the Rybczynski hypothesis in this study. Design/methodology/approach Ordinary least square (OLS) techniques are used in this study, which relies on data from the NBER International Trade and Geography Data...

The paper retrospectively analyses the issue of the impact of international trade on developed countries' labour markets in the 1990s, when the majority of academic opinion denied the role of trade in the misfortunes of unskilled workers. An analytical framework is proposed in which...

In this paper we revisit the influential theory of monopolistic competition and optimum product variety as developed by Dixit and Stiglitz (1977) with applications in international trade by Krugman (1979,1980), by modeling fixed and variable costs of production in terms of underlying use of...

In this paper we revisit the influential theory of monopolistic competition and optimum product variety as developed by Dixit and Stiglitz (1977) with applications in international trade by Krugman (1979,1980), by modeling fixed and variable costs of production in terms of underlying use of...

This paper studies the location choice of foreign multinational firms in the Baltic economies of Estonia, Latvia, and Lithuania using a knowledge-and-physical capital model across 2004-2017. We used the Bayesian model averaging estimation method to investigate a set of possible factors that...

Cross-sectional data show Global North countries export higher quality products at a point in time. Product-level panel data can address if countries improve their export quality over time. The literature has addressed this practically relevant panel question only in small samples over the short...

This paper sets out a general equilibrium pollution and trade model to provide a framework for examination of the trade and environment debate. The model contains as special cases a canonical pollution haven model as well as the standard Heckscher-Ohlin-Samuelson factor endowments model. We draw...

Recent literature on the labor-market effects of U.S. immigration tends to find little correlation between regional immigrant inflows and changes in relative regional wages. In this paper we examine whether immigration, or endowment shocks more generally, altered U.S. regional output mixes as...

It has been alleged that multinational firms fail to adapt their methods of production to take advantage of the abundance and low price of labor in less developed countries and therefore contribute to the unemployment problems of these countries. This paper asks two questions: do multi-national...

The dominant paradigm of world trade patterns posits two principal features. Trade between North and South arises due to traditional comparative advantage, largely determined by differences in endowment patterns. Trade within the North, much of it intra-industry trade, is based on economies of...

This paper develops a model of multi-product firms in the presence of different types of labor. I show that an increase in the supply of skilled labor has non- uniform impact on the firm scope: a rise in the number of skilled labor allows the highly productive firms to add more varieties into...

There are two contrasting views of pre-19th century trade and globalization. First, there are the world history scholars like Andre Gunder Frank who attach globalization 'big bang' significance to the dates 1492 (Christopher Colombus stumbles on the Americas in search of spices) and 1498 (Vasco...

Factor productivity is traditionally studied through the measurement of factor intensity for sectors of the economy. However, this measurement is restricted to their direct use within the sector ignoring their embeddedness in upstream sectors. Therefore, an underestimation of the factor...

In contemporary data, the measured factor content of trade is far smaller than its predicted magnitude in the pure Heckscher-Ohlin-Vanek framework, the so-called 'missing trade' mystery. We wonder if this problem has been there from the beginning: that is, we ask if the Heckscher-Ohlin theory...

Foreign Direct Investment (FDI) has been growing rapidly, at a pace far exceeding the growth in international trade. Thus, a full understanding of the relationship between trade in goods and FDI is important for obtaining a complete picture of the extent and sources of international linkages. We...

The standard neoclassical model of trade theory predicts that international specialization will be jointly determined by cross-country differences in relative factor endowments and relative technology levels. This paper uses duality theory combined with a flexible functional form to specify an...

Study of the factor content of trade has become a laboratory to test our ideas about how the key elements of endowments, production, absorption and trade fit together within a general equilibrium framework. Already a great deal of progress has been made in fitting these pieces together....

Within developing and newly industrialized countries, rising wage inequality is both common and highly correlated with export growth. This is incompatible with the Stolper-Samuelson theorem, but suggestive of a role for technological catch-up. We develop this insight using a model that features...

Do scale economies contribute to our understanding of international trade? Do international trade flows encode information about the extent of scale economies? To answer these questions we examine the large class of general equilibrium theories that imply Helpman-Krugman variants of the Vanek...

The classical Heckscher-Ohlin-Mundell paradigm states that trade and capital mobility are substitutes, in the sense that trade integration reduces the incentives for capital to flow to capital-scarce countries. In this paper we show that in a world with heterogeneous financial development, the...

The last decade witnessed an explosion of research into the impact of international technology differences on the factor content of trade. Yet the literature has failed to confront two pivotal issues. First, with international technology differences and traded intermediate inputs there does not...

In this paper we revisit the influential theory of monopolistic competition and optimum product variety as developed by Dixit and Stiglitz (1977) with applications in international trade by Krugman (1979,1980), by modeling fixed and variable costs of production in terms of underlying use of...

Examining the relationship between factor endowments and production patterns using international and Japanese regional data, we provide the first empirical confirmation of Ethier's correlation approach to the Rybczynski theorem. Moreover, we find evidence of substantial production indeterminacy....

We estimate the effect of factor proportions on the pattern of manufacturing specialization in a cross-section of OECD countries, taking into account that factor accumulation responds to productivity. We show that the failure to control for productivity differences produces biased estimates. Our...

Many previous tests of Heckscher-Ohlin trade theory have found underwhelming support for the idea that countries' endowments determine their production and trade. This paper demonstrates that those efforts suffer from their focus on the narrower of the model's two potential equilibria, which...

During the last two decades, new research has greatly advanced our understanding of the structure of world trade. This article reviews the empirical literature that grew out of this effort, emphasizing the ways in which it relied on theoretical developments

This paper provides new evidence on the determinants of individual trade policy preferences using an individual-level data set identifying both stated trade policy preferences and potential trade exposure through several channels for the United States in 1992. There are two main empirical...