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An Account of Global Factor Trade

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  • Donald R. Davis
  • David E. Weinstein

Abstract

A half-century of empirical work on the factor proportions theory has identified "paradoxes" and "mysteries," but has failed to 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 examine these directly on the technology and absorption data of interest. We show how a few simple and plausible amendments, verified directly by this data, suffice for a striking confirmation of the HOV theory. Countries export the services of abundant factors and in approximately the right magnitude. HOV works.

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Bibliographic Info

Paper provided by Harvard - Institute of Economic Research in its series Harvard Institute of Economic Research Working Papers with number 1849.

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Date of creation: 1998
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Handle: RePEc:fth:harver:1849

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References

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