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The Heckscher-Ohlin Model and the Network Structure of International Trade

Author

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  • Baskaran, Thushyanthan
  • Blöchl, Florian
  • Brück, Tilmann
  • 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 then 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 differences in factor endowments increase bilateral trade in goods that are traded in "dispersed" networks. For goods that are traded in "concentrated" networks, factor endowment differentials are less important.

Suggested Citation

  • Baskaran, Thushyanthan & Blöchl, Florian & Brück, Tilmann & Theis, Fabian J., 2010. "The Heckscher-Ohlin Model and the Network Structure of International Trade," MPRA Paper 30187, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:30187
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    Cited by:

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    2. Yilmazkuday, Hakan, 2015. "Importer-specific elasticities of demand: Evidence from U.S. exports," International Review of Economics & Finance, Elsevier, vol. 35(C), pages 228-234.
    3. Joyez, Charlie, 2017. "On the topological structure of multinationals network," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 473(C), pages 578-588.
    4. Smallbone, David & Saridakis, George & Abubakar, Yazid Abdullahi, 2022. "Internationalisation as a stimulus for SME innovation in developing economies: Comparing SMEs in factor-driven and efficiency-driven economies," Journal of Business Research, Elsevier, vol. 144(C), pages 1305-1319.
    5. Gao, Cuixia & Sun, Mei & Shen, Bo, 2015. "Features and evolution of international fossil energy trade relationships: A weighted multilayer network analysis," Applied Energy, Elsevier, vol. 156(C), pages 542-554.
    6. Charlie Joyez, 2017. "Network Structure of French Multinational Firms," Working Papers DT/2017/08, DIAL (Développement, Institutions et Mondialisation).
    7. Xu, Helian & Cheng, Long, 2016. "The QAP weighted network analysis method and its application in international services trade," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 448(C), pages 91-101.
    8. Narayan, Seema & Nguyen, Tri Tung, 2016. "Does the trade gravity model depend on trading partners? Some evidence from Vietnam and her 54 trading partners," International Review of Economics & Finance, Elsevier, vol. 41(C), pages 220-237.
    9. Bhattacharya, Mita & Inekwe, John Nkwoma & Valenzuela, Maria Rebecca, 2020. "Credit risk and financial integration: An application of network analysis," International Review of Financial Analysis, Elsevier, vol. 72(C).
    10. An, Qier & An, Haizhong & Wang, Lang & Gao, Xiangyun & Lv, Na, 2015. "Analysis of embodied exergy flow between Chinese industries based on network theory," Ecological Modelling, Elsevier, vol. 318(C), pages 26-35.

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    More about this item

    Keywords

    Networks; international trade; gravity model;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • F10 - International Economics - - Trade - - - General

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