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Definitions of Factor Abundance and the Factor Content of Trade

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  • Henry Thompson

Abstract

This paper points out that the different definitions of factor abundance in the empirical trade literature are weaker than in the Heckscher-Ohlin model, which compares endowments of two factors across two countries. These different definitions in practice lead to different factor abundance rankings when there are three or more countries or factors. A lack of correlation between a weak measure of factor abundance and the factor content of trade provides no ground to claim that factor proportions trade theory fails. A working definition of factor abundance more in line with the traditional one is proposed. Copyright Kluwer Academic Publishers 1999

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  • Henry Thompson, 1999. "Definitions of Factor Abundance and the Factor Content of Trade," Open Economies Review, Springer, vol. 10(4), pages 385-393, October.
    • Handle: RePEc:kap:openec:v:10:y:1999:i:4:p:385-393
    DOI: 10.1023/A:1008333714210
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    References listed on IDEAS

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    1. 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 421-446, June.
    2. 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.
    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. Henry Thompson, 1985. "Complementarity in a Simple General Equilibrium Production Model," Canadian Journal of Economics, Canadian Economics Association, vol. 18(3), pages 616-621, August.
    5. Harkness, Jon P, 1983. "The Factor-Proportions Model with Many Nations, Goods and Factors: Theory and Evidence," The Review of Economics and Statistics, MIT Press, vol. 65(2), pages 298-305, May.
    6. Maskus, Keith E., 1985. "A test of the Heckscher-Ohlin-Vanek theorem: The Leontief commonplace," Journal of International Economics, Elsevier, vol. 19(3-4), pages 201-212, November.
    7. Leamer, Edward E, 1974. "The Commodity Composition of International Trade in Manufactures: An Empirical Analysis," Oxford Economic Papers, Oxford University Press, vol. 26(3), pages 350-374, November.
    8. 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.
    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.
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    Cited by:

    1. Kang, Myeongjoo & Malki, Mostafa & Rassekh, Farhad & Thompson, Henry, 2007. "Empirical factor abundance with many factors and countries," International Review of Economics & Finance, Elsevier, vol. 16(2), pages 287-299.
    2. Farhad Rassekh & Henry Thompson, 2002. "Measuring Factor Abundance Across Many Factors and Countries," Open Economies Review, Springer, vol. 13(3), pages 237-249, July.
    3. Dasgupta, Indro & Osang, Thomas, 2002. "Globalization and relative wages: further evidence from U.S. manufacturing industries," International Review of Economics & Finance, Elsevier, vol. 11(1), pages 1-16, April.

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    Keywords

    factor abundance; factor content;

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