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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 attempting to predict the factor content of trade in goods has failed to bring theory and data into congruence. Our study shows how the Heckscher-Ohlin-Vanek theory, when modified to permit technical differences, a breakdown in factor price equalization, the existence of nontraded goods, and costs of trade, is consistent with data from ten OECD countries and a rest-of-world aggregate.

Suggested Citation

  • 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.
  • Handle: RePEc:aea:aecrev:v:91:y:2001:i:5:p:1423-1453
    Note: DOI: 10.1257/aer.91.5.1423
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    References listed on IDEAS

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    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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