Reconsidering the Role of Capital Accumulation for International Specialization across Industries
AbstractThe Heckscher-Ohlin-Vanek (HOV) model allows us to analyze whether countries specialize in particular subsets of industries as they accumulate production factors. Davis and Weinstein (2001) provided evidence that global data supports the HOV model when production techniques are modified to reflect countries’ capital abundances. However, once factor trades are measured bilaterally from the producer countries’ techniques, the HOV prediction can be supported without specialization. This paper examines the relative importance of specialization and technical differences. While I find that developed and developing countries employ different techniques, capital accumulation does not cause a shift in the domestic production mix towards more capital-intensive one. The international mobility in capital appears to be crucial to understand why it is difficult to provide evidence for capital-driven specialization.
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Bibliographic InfoPaper provided by Department of Economics, West Virginia University in its series Working Papers with number 09-13.
Length: 31 pages
Date of creation: 2009
Date of revision:
Heckscher-Ohlin; Cross-industry Specialization; Production Technique; International Mobility in Capital;
Find related papers by JEL classification:
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-12-19 (All new papers)
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