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The Heckscher-Ohlin Model Between 1400 and 2000: When It Explained Factor Price Convergence, When It Did Not, and Why

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  • O'Rourke, Kevin H
  • Williamson, Jeffrey G

Abstract

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 Columbus stumbles on America in search of spices) and 1498 (Vasco da Gama makes an end run around Africa snatching monopoly rents away from Arab and Venetian spice traders). Such scholars are on the side of Adam Smith who believed that these were the two most important events in recorded history. Second, there is the view that the world economy was still fragmented before the 19th century. This paper offers a novel way to discriminate between these competing views and we use it to show that there is no evidence that the Ages of Discovery and Commerce had the economic impact on the global economy the world historians assign to them, while there is plenty of evidence of a very big bang in the 19th century. The test involves a close look at the connections between factor prices, commodity prices and endowments world-wide.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2372.

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Date of creation: Feb 2000
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Handle: RePEc:cpr:ceprdp:2372

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Keywords: Factor Prices; Globalization; History;

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References

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  4. Alan M. Taylor & Jeffrey G. Williamson, 1994. "Convergence in the Age of Mass Migration," NBER Working Papers 4711, National Bureau of Economic Research, Inc.
  5. O'Rourke, Kevin H & Taylor, Alan M & Williamson, Jeffrey G, 1996. "Factor Price Convergence in the Late Nineteenth Century," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(3), pages 499-530, August.
  6. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
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  10. O'Rourke Kevin, 1994. "The Repeal of the Corn Laws and Irish Emigration," Explorations in Economic History, Elsevier, vol. 31(1), pages 120-138, January.
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  20. O'Rourke, Kevin & Williamson, Jeffrey G., 1994. "Late Nineteenth-Century Anglo-American Factor-Price Convergence: Were Heckscher and Ohlin Right?," The Journal of Economic History, Cambridge University Press, vol. 54(04), pages 892-916, December.
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Citations

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Cited by:
  1. Mandelman, Federico S. & Zlate, Andrei, 2012. "Immigration, remittances and business cycles," Journal of Monetary Economics, Elsevier, vol. 59(2), pages 196-213.
  2. Ekeland, Ivar & Guesnerie, Roger, 2010. "The geometry of global production and factor price equalisation," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 666-690, September.
  3. Varma, Sumati & Bagoria, Mukesh, 2012. "Diasporas and international entrepreneurship – evidence from the Indian IT industry," MPRA Paper 47207, University Library of Munich, Germany.
  4. Jeffrey G. Williamson, 2000. "Land, Labor and Globalization in the Pre-Industrial Third World," NBER Working Papers 7784, National Bureau of Economic Research, Inc.
  5. Ivar Ekeland & Roger Guesnerie, 2006. "The geometry of global production and factor price equalisation," Working Papers halshs-00589105, HAL.
  6. Rassekh, Farhad, 2010. "Is Stolper-Samuelson dangerous and FPE a failure?," International Review of Economics & Finance, Elsevier, vol. 19(4), pages 555-561, October.

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  1. Model Heckscher–Ohlin in Wikipedia (Indonesian)
  2. Heckscher–Ohlin model in Wikipedia (English)
  3. ヘクシャー=オリーン・モデル in Wikipedia (Japanese)

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