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International differences in production techniques: Implications for the factor content of trade

  • Nishioka, Shuichiro

This paper examines how production techniques differ across countries, factors, and industries and considers its implications for previous empirical evidence on the Vanek prediction. I find that production techniques differ substantially across countries and factors, but differ much less across industries within a country. Davis and Weinstein (2001) argue that modeling cross-industry differences (multiple-cone specialization) improves the fit of the Vanek prediction; however, their test statistics are unchanged when one restricts techniques to be identical across industries within a country. Thus, the bulk of world factor content of trade does not arise from specialization.

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Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 87 (2012)
Issue (Month): 1 ()
Pages: 98-104

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Handle: RePEc:eee:inecon:v:87:y:2012:i:1:p:98-104
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505552

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  1. Leamer, Edward E, 1980. "The Leontief Paradox, Reconsidered," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 495-503, June.
  2. Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, vol. 85(5), pages 1029-46, December.
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  4. Peter K. Schott, 2004. "Across-product Versus Within-product Specialization in International Trade," The Quarterly Journal of Economics, MIT Press, vol. 119(2), pages 646-677, May.
  5. Patrick J. Conway, 2002. "The Case of the Missing Trade and Other Mysteries: Comment," American Economic Review, American Economic Association, vol. 92(1), pages 394-404, March.
  6. Keith E. Maskus & Shuichiro Nishioka, 2009. "Development-related biases in factor productivities and the HOV model of trade," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 519-553, May.
  7. Fadinger, Harald, 2008. "Productivity Differences in an Interdependent World," MPRA Paper 7603, University Library of Munich, Germany.
  8. Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1980. "Heckscher- Ohlin Trade Theory with a Continuum of Goods," The Quarterly Journal of Economics, MIT Press, vol. 95(2), pages 203-24, September.
  9. Helpman, E., 1998. "The Structure of Foreign Trade," Papers 18-98, Tel Aviv.
  10. Harry P. Bowen & Edward E. Leamer & Leo Sveikauskas, 1986. "Multicountry, Multifactor Tests of the Factor Abundance Theory," NBER Working Papers 1918, National Bureau of Economic Research, Inc.
  11. Donald R. Davis & David E. Weinstein, 1998. "An Account of Global Factor Trade," NBER Working Papers 6785, National Bureau of Economic Research, Inc.
  12. Fadinger, Harald, 2011. "Productivity differences in an interdependent world," Journal of International Economics, Elsevier, vol. 84(2), pages 221-232, July.
  13. Francesco Caselli & James Feyrer, 2006. "The Marginal Product of Capital," CEP Discussion Papers dp0735, Centre for Economic Performance, LSE.
  14. Trefler, Daniel & Zhu, Susan Chun, 2010. "The structure of factor content predictions," Journal of International Economics, Elsevier, vol. 82(2), pages 195-207, November.
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