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The Heckscher-Ohlin model and the network structure of international trade

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  • Baskaran, Thushyanthan
  • Blöchl, Florian
  • Brück, Tilman
  • Theis, Fabian J.

Abstract

This paper estimates for 28 product groups a characteristic parameter that reflects the topological structure of its trading network. Using these estimates, it describes how the structure of international trade has evolved during the 1980-2000 period. Thereafter, it demonstrates the importance of networks in international trade by explicitly accounting for their scaling properties when testing the prediction of the "Heckscher-Ohlin" model that factor endowment differentials determine bilateral trade flows. The results suggest that factor endowment differentials increase bilateral trade in goods that are traded in "dispersed" networks. For goods traded in "concentrated" networks, factor endowment differentials are less important.

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Bibliographic Info

Article provided by Elsevier in its journal International Review of Economics & Finance.

Volume (Year): 20 (2011)
Issue (Month): 2 (April)
Pages: 135-145

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Handle: RePEc:eee:reveco:v:20:y:2011:i:2:p:135-145

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Web page: http://www.elsevier.com/locate/inca/620165

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Keywords: Networks International trade Gravity model;

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References

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  1. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
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