IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/95161.html
   My bibliography  Save this paper

Heckscher-Ohlin Trade, Leontief Trade, and Factor Conversion Trade When Countries Have Different Technologies

Author

Listed:
  • Guo, Baoping

Abstract

Kurokawa (2011), Takahashi (2004), Simpson (2016), and Kozo and Yoshinori (2017) have demonstrated the evidence of the factor intensity reversals (FIRs) in their empirical studies. This is another big challenge for international economics after Leontief paradox. This paper demonstrates that there are three trade types in international trade: the Heckscher-Ohlin trade, the Leontief trade, and the conversion trade, by using the 2×2×2 Trefler model. The conversion trade occurs when the model structure is with FIRs. The conversion trade is one that one country exports the commodity that uses its scarce factor intensively; another country exports the commodity that uses its abundant factor intensively. The conversion trade actually is the trade with factor content reversal , i.e. that if one country exports the services of capital and imports the services of labor, another country does the same. This study demonstrates that both the Leontief trade and the conversion trade are rooted in the Heckscher-Ohlin theories. The three trade types are under the generalized trade pattern that each country exports the commodity that uses its effective (virtual) abundant factor intensively and imports the commodity that uses its effective (virtual) scarce factor intensively.

Suggested Citation

  • Guo, Baoping, 2015. "Heckscher-Ohlin Trade, Leontief Trade, and Factor Conversion Trade When Countries Have Different Technologies," MPRA Paper 95161, University Library of Munich, Germany, revised Jul 2019.
    • Handle: RePEc:pra:mprapa:95161
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/95161/1/MPRA_paper_95161.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Yong_Seok Choi & Pravin Krishna, 2000. "The Factor Content of Bilateral Trade:an Empirical Test," Working Papers 2000-11, Brown University, Department of Economics.
    2. Leamer, Edward E, 1980. "The Leontief Paradox, Reconsidered," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 495-503, June.
    3. Romney Robinson, 1956. "Factor Proportions and Comparative Advantage: Part II," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(3), pages 346-363.
    4. Donald R. Davis & David E. Weinstein, 2001. "An Account of Global Factor Trade," American Economic Review, American Economic Association, vol. 91(5), pages 1423-1453, December.
    5. Helpman, Elhanan, 1984. "The Factor Content of Foreign Trade," Economic Journal, Royal Economic Society, vol. 94(373), pages 84-94, March.
    6. Fisher, Eric O'N., 2011. "Heckscher-Ohlin theory when countries have different technologies," International Review of Economics & Finance, Elsevier, vol. 20(2), pages 202-210, April.
    7. Eric O’N. Fisher & Kathryn G. Marshall, 2016. "Leontief was not right after all," Journal of Productivity Analysis, Springer, vol. 46(1), pages 15-24, August.
    8. Sampson, Thomas, 2016. "Assignment reversals: Trade, skill allocation and wage inequality," Journal of Economic Theory, Elsevier, vol. 163(C), pages 365-409.
    9. R. W. Jones, 1956. "Factor Proportions and the Heckscher-Ohlin Theorem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 24(1), pages 1-10.
    10. Yong-Seok Choi & Pravin Krishna, 2004. "The Factor Content of Bilateral Trade: An Empirical Test," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 887-914, August.
    11. Casas, Francois R & Choi, E Kwan, 1985. "The Leontief Paradox: Continued or Resolved?," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 610-615, June.
    12. Krugman, Paul R., 2000. "Technology, trade and factor prices," Journal of International Economics, Elsevier, vol. 50(1), pages 51-71, February.
    13. Trefler, Daniel, 1993. "International Factor Price Differences: Leontief Was Right!," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 961-987, December.
    14. Takahashi, Harutaka, 2004. "The capital-intensity reversal in the postwar Japanese economy: Why did Japan grow so fast during 1955-1975?," MPRA Paper 24861, University Library of Munich, Germany, revised Feb 2008.
    15. Romney Robinson, 1956. "Factor Proportions and Comparative Advantage: Part I," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(2), pages 169-192.
    16. Casas, F R & Choi, E K, 1984. "Trade Imbalance and the Leontief Paradox," The Manchester School of Economic & Social Studies, University of Manchester, vol. 52(4), pages 391-401, December.
    17. Guo, Baoping, 2019. "The Simplest Factor Price Non-Equalization When Countries Have Different Productivities," MPRA Paper 95015, University Library of Munich, Germany, revised 12 Jul 2019.
    18. Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, vol. 85(5), pages 1029-1046, December.
    19. Bagicha S. Minhas, 1962. "The Homohypallagic Production Function, Factor-Intensity Reversals, and the Heckscher-Ohlin Theorem," Journal of Political Economy, University of Chicago Press, vol. 70(2), pages 138-138.
    20. Baoping Guo, 2005. "Endogenous Factor-Commodity Price Structure by Factor Endowments," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 11(4), pages 484-484, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guo, Baoping, 2015. "Leontief Paradox Explored A New Trade Pattern When Countries Have Different Technologies," MPRA Paper 96929, University Library of Munich, Germany, revised Nov 2019.
    2. Daniel Bernhofen, 2010. "The Empirics of General Equilibrium Tade Theory: What Have we Learned?," CESifo Working Paper Series 3242, CESifo.
    3. Ciaian, Pavel & Kancs, d'Artis & Pokrivcak, Jan, 2011. "Comparative Advantages, Transaction Costs and Factor Content in Agricultural Trade: Empirical Evidence from the CEE - Vantaggi comparati, costi di transazione e contenuto dei fattori nel commercio agr," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 64(1), pages 67-101.
    4. Lai, Huiwen & Zhu, Susan Chun, 2007. "Technology, endowments, and the factor content of bilateral trade," Journal of International Economics, Elsevier, vol. 71(2), pages 389-409, April.
    5. Haiwen Zhou, 2007. "Factor Endowment, the Choice of Technology, and the Volume of Trade," International Economic Journal, Taylor & Francis Journals, vol. 21(4), pages 593-611.
    6. Andrés Artal & Juana Castillo & Francisco Requena, 2006. "Contrastación empírica del modelo de dotaciones factoriales para el comercio interregional de España," Investigaciones Economicas, Fundación SEPI, vol. 30(3), pages 539-576, September.
    7. Pavel Ciaian & d'Artis Kancs & Jan Pokrivcak, 2008. "Comparative Advantages, Transaction Costs and Factor Content of Agricultural Trade: Empirical Evidence from the CEE," EERI Research Paper Series EERI_RP_2008_03, Economics and Econometrics Research Institute (EERI), Brussels.
    8. Assaf Zimring, 2019. "Testing the Heckscher–Ohlin–Vanek theory with a natural experiment," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(1), pages 58-92, February.
    9. D'Artis Kancs & Pavel Ciaian, 2010. "Factor content of bilateral trade: the role of firm heterogeneity and transaction costs," Agricultural Economics, International Association of Agricultural Economists, vol. 41(3‐4), pages 305-317, May.
    10. Elhanan Helpman, 1999. "The Structure of Foreign Trade," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 121-144, Spring.
    11. repec:wvu:wpaper:09-13 is not listed on IDEAS
    12. Donald R. Davis & David E. Weinstein, 2001. "The Factor Content of Trade," NBER Working Papers 8637, National Bureau of Economic Research, Inc.
    13. García, Pablo Marcelo, 2005. "Measuring Willingness-to-Pay in Discrete Chice Models with Semi-Parametric Techniques," Revista Latinoamericana de Desarrollo Economico, Carrera de Economía de la Universidad Católica Boliviana (UCB) "San Pablo", issue 5, pages 83-100, Octubre.
    14. D'Artis Kancs & Pavel Ciaian, 2010. "Factor content of bilateral trade: the role of firm heterogeneity and transaction costs," Agricultural Economics, International Association of Agricultural Economists, vol. 41(3‐4), pages 305-317, May.
    15. Fisher, Eric O'N., 2011. "Heckscher-Ohlin theory when countries have different technologies," International Review of Economics & Finance, Elsevier, vol. 20(2), pages 202-210, April.
    16. d’Artis Kancs & Pavel Ciaian, 2012. "The Factor Content of Heterogeneous Firm Trade," The World Economy, Wiley Blackwell, vol. 35(3), pages 373-393, March.
    17. Demmou Lilas, 2009. "Déterminants et nature des spécialisations Nord-Sud : quelques enseignements tirés de la littérature empirique," Revue d'économie politique, Dalloz, vol. 119(1), pages 71-94.
    18. Artal-Tur, Andrés & Castillo-Giménez, Juana & Llano-Verduras, Carlos & Requena-Silvente, Francisco, 2011. "The factor content of regional bilateral trade: The role of technology and demand," International Review of Economics & Finance, Elsevier, vol. 20(2), pages 157-172, April.
    19. Guo, Baoping, 2019. "The Simplest Factor Price Non-Equalization When Countries Have Different Productivities," MPRA Paper 95015, University Library of Munich, Germany, revised 12 Jul 2019.
    20. James Cassing & Shuichiro Nishioka, 2015. "Per Capita Income and the Mystery of Missing Trade," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 606-619, August.
    21. BEHRENS, Kristian & LAMORGESE, Andrea R. & OTTAVIANO, Gianmarco I.P. & TABUCHI, Takatoshi, 2005. "Testing the ‘home market effect’ in a multi-country world," LIDAM Discussion Papers CORE 2005055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

    More about this item

    Keywords

    Heckscher-Ohlin-Ricardo model; different technologies; Heckscher-Ohlin Trade; Leontief Trade; and Conversion Trade; factor content of trade; trade types; Leontief Paradox; virtual factor endowments; effective factor endowments;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General
    • F1 - International Economics - - Trade
    • F10 - International Economics - - Trade - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:95161. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.