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The Heckscher-Ohlin model and the network structure of international trade

  • Baskaran, Thushyanthan
  • Blöchl, Florian
  • Brück, Tilman
  • Theis, Fabian J.

This paper estimates for 28 product groups a characteristic parameter that reflects the topological structure of its trading network. Using these estimates, it 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 factor endowment differentials increase bilateral trade in goods that are traded in "dispersed" networks. For goods traded in "concentrated" networks, factor endowment differentials are less important.

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Article provided by Elsevier in its journal International Review of Economics & Finance.

Volume (Year): 20 (2011)
Issue (Month): 2 (April)
Pages: 135-145

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Handle: RePEc:eee:reveco:v:20:y:2011:i:2:p:135-145
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620165

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  1. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
  2. Davis, Donald R. & David E. Weinstein & Scott C. Bradford & Kazushige Shimpo, 1997. "Using International and Japanese Regional Data to Determine When the Factor Abundance Theory of Trade Works," American Economic Review, American Economic Association, vol. 87(3), pages 421-46, June.
  3. Bowen, Harry P & Leamer, Edward E & Sveikauskas, Leo, 1987. "Multicountry, Multifactor Tests of the Factor Abundance Theory," American Economic Review, American Economic Association, vol. 77(5), pages 791-809, December.
  4. Florian Blöchl & Fabian J. Theis & Fernando Vega-Redondo & Eric O'N. Fisher, 2010. "Which Sectors of a Modern Economy are most Central?," CESifo Working Paper Series 3175, CESifo Group Munich.
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  6. Hakura, Dalia S., 2001. "Why does HOV fail?: The role of technological differences within the EC," Journal of International Economics, Elsevier, vol. 54(2), pages 361-382, August.
  7. Giorgio Fagiolo & Javier Reyes & Stefano Schiavo, 2010. "The evolution of the world trade web: a weighted-network analysis," Journal of Evolutionary Economics, Springer, vol. 20(4), pages 479-514, August.
  8. 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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  10. Simon J. Evenett & Wolfgang Keller, 1998. "On Theories Explaining the Success of the Gravity Equation," NBER Working Papers 6529, National Bureau of Economic Research, Inc.
  11. Cesar A. Hidalgo & Ricardo Hausmann, 2009. "The Building Blocks of Economic Complexity," Papers 0909.3890, arXiv.org.
  12. Thushyanthan Baskaran & Tilman Brück, 2005. "Scale-Free Networks in International Trade," Discussion Papers of DIW Berlin 493, DIW Berlin, German Institute for Economic Research.
  13. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
  14. Raja Kali & Javier Reyes, 2007. "The architecture of globalization: a network approach to international economic integration," Journal of International Business Studies, Palgrave Macmillan, vol. 38(4), pages 595-620, July.
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  17. Wilhite, Allen, 2001. "Bilateral Trade and 'Small-World' Networks," Computational Economics, Society for Computational Economics, vol. 18(1), pages 49-64, August.
  18. M. Goldstein & S. Morris & G. Yen, 2004. "Problems with fitting to the power-law distribution," The European Physical Journal B - Condensed Matter and Complex Systems, Springer, vol. 41(2), pages 255-258, 09.
  19. repec:cup:cbooks:9780521857406 is not listed on IDEAS
  20. Giorgio Fagiolo & Javier Reyes & Stefano Schiavo, 2007. "The Evolution of the World Trade Web," LEM Papers Series 2007/17, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  21. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-16, March.
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