Do Countries' Factor Endowments Correspond to the Factor Contents in Their Bilateral Trade Flows?

Hamilton, Carl; Lars, Eriksson

doi:10.2307/3439405

Cited by 11 publications

(5 citation statements)

References 8 publications

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“…This finding is consistent with the observation that the factor proportions hypothesis in its orthodox form cannot explain Australian trade flows in manufactures (Hamilton and Svensson, 1984). The technology intensity variable (RD) has the expected sign and is statistically significant, supporting the hypothesis that within manufactures Australia has comparative advantage in technology-intensive products.…”

Section: ML Export Intensitysupporting

confidence: 89%

Determinants of international trade: A simultaneous equation model

Ratnayake

1994

New Zealand Economic Papers

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Section: ML Export Intensitysupporting

confidence: 89%

Determinants of international trade: A simultaneous equation model

Ratnayake

1994

New Zealand Economic Papers

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“…The insignificant coefficient attached to physical capital intensity lends support to the observation that the orthodox factor-proportion hypothesis cannot explain Australian trade flows (Hamilton and Svensson 1984).…”

Section: Resultssupporting

confidence: 60%

Patterns and Determinants of Export Specialisation in Australian Manufacturing

Ratnayake

1990

Australian Journal of Management

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This paper examines the patterns and determinants of Australia's revealed comparative advantage in manufactured exports. The results show that Australia's greatest comparative advantage is in technology-intensive and skillintensive products. Export competitiveness appears to be positively influenced by the intensity of intra-industry trade, overseas investment, research-anddevelopment expenditure intensity and human-capital intensity. On the other hand, high protection has been a major deterrent to international competitiveness.

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“…and Svensson (1984) provide support for the two-factor version of the Heckscher-Ohlin theory (when capital consists of human and physical capital) as determinant of the bilateral factor content of trade. Therefore, it seems to be of additional interest also to apply empirically the two-factor version of the HOV theorem [5].…”

mentioning

confidence: 65%

“…5. The study by Hamilton and Svensson (1984) is based on the so called "chain of comparative advantage" as introduced by Krueger (1977). This "chain" offers predictions on the bilateral pattern of trade whereas the HOV theorem is concerned with countries' trade with the rest of the world.…”

Section: Notesmentioning

confidence: 99%

The factor content of net trade for the OECD countries

Torstensson

1995

Journal of Economic Studies

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IntroductionIn the traditional Heckscher-Ohlin theory the factor content of net trade is determined by inter-country differences in relative factor endowments. The Heckscher-Ohlin-Vanek (HOV) theorem shows that countries will have an embodied net export of factors in which they have an abundant relative endowment and a net import of factors in which they have a scarce relative endowment (see Vanek, 1968). Although scale economies are another cause of trade in more recent theories, the HOV theorem is upheld and the factor content of net trade is still determined by differences in relative factor endowments (see Helpman and Krugman, 1985, pp. 261-2).This article examines the predictions of the theorem on each and every Organization for Economic Co-operation and Development (OECD) country's net trade in 1986. There have been several empirical tests of the HOV theorem. Early studies mostly examined only one country, usually the USA [1]. Recently, however, there have been a few multi-country studies (Baldwin, 1979;Bowen et al., 1987;Clifton and Marxsen, 1983). This study differs from most earlier multicountry studies in three ways. First, it examines a more recent year. Whereas earlier studies have mainly analysed trade flows in the 1960s or early 1970s, this article examines trade in 1986 [2].Second, this study examines trade in a framework with two factors of production where capital constitutes the total of physical and human capital [3]. The most well-known and comprehensive multi-country test of the HOV theorem by Bowen et al. (1987) fails to offer empirical support for the theorem in the case with many factors of production [4]. The choice of the number of factors in the empirical analysis is not straightforward. The inclusion of many factors of production might provide an increased realism of the analysis. However, it also leads to increased difficulties such as errors of measurement and problems in making the empirical definitions of factor intensities and factor endowments. There exist empirical measures of capital intensity and capital endowment that are widely accepted and closely linked to the theoretical concepts that can be used in the two-factor, but not in the multi-factor, case. Furthermore, Hamilton Many colleagues have offered helpful suggestions to an earlier version of this article. In particular, the author wishes to thank Yves Bourdet, David Greenaway, Göte Hansson, Pär Hansson, Rasha Torstensson and Bo Södersten. Financial support from the Bank of Sweden Tercentenary Foundation and the Tore Browaldh Foundation is gratefully acknowledged.

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Do Countries' Factor Endowments Correspond to the Factor Contents in Their Bilateral Trade Flows?

Cited by 11 publications

References 8 publications

Determinants of international trade: A simultaneous equation model

Determinants of international trade: A simultaneous equation model

Patterns and Determinants of Export Specialisation in Australian Manufacturing

The factor content of net trade for the OECD countries

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