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Factor Content Functions and the Theory of International Trade

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  • J. Peter Neary
  • Albert G. Schweinberger

Abstract

This paper introduces the concepts of direct and indirect factor trade utility functions and uses them to derive Marshallian and Hicksian factor content functions, which express the quantities of factors of production embodied in net imports as functions of the exogenous variables facing the economy. The properties of these functions are discussed and they are used to derive a number of new results. In particular, it is shown that, in certain circumstances, the existence of gains from trade is sufficient for the Heckscher-Ohlin theorem to hold in its factor content form.

Suggested Citation

  • J. Peter Neary & Albert G. Schweinberger, 1986. "Factor Content Functions and the Theory of International Trade," Review of Economic Studies, Oxford University Press, vol. 53(3), pages 421-432.
  • Handle: RePEc:oup:restud:v:53:y:1986:i:3:p:421-432.
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    Cited by:

    1. Daniel Bernhofen, 2009. "Predicting the pattern of international trade in the neoclassical model: a synthesis," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 41(1), pages 5-21, October.
    2. Daniel M. Bernhofen, "undated". "The Empirics of General Equilibrium Trade Theory: What Have We Learned?," Discussion Papers 10/24, University of Nottingham, GEP.
    3. Louis Dupuy & Matthew Agarwala, 2014. "International trade and sustainable development," Chapters,in: Handbook of Sustainable Development, chapter 25, pages 399-417 Edward Elgar Publishing.
    4. Rodrigo Adao & Arnaud Costinot & Dave Donaldson, 2017. "Nonparametric Counterfactual Predictions in Neoclassical Models of International Trade," American Economic Review, American Economic Association, vol. 107(3), pages 633-689, March.
    5. Joseph Francis Francois & Miriam Manchin, 2013. "Lerner meets Gravity," UCL SSEES Economics and Business working paper series 123, UCL School of Slavonic and East European Studies (SSEES).
    6. Schweinberger, Albert G, 1996. "Procompetitive Gains from Trade and Comparative Advantage," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(2), pages 361-375, May.
    7. James E. Anderson & J. Peter Neary, 2003. "The Mercantilist Index of Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 627-649, May.
    8. Flôres Junior, Renato Galvão, 2008. "Are CGE Models still useful in economic policy making?," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 674, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
    9. Neary, J Peter, 1998. " Pitfalls in the Theory of International Trade Policy: Concertina Reforms of Tariffs, and Subsidies to High-Technology Industries," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(1), pages 187-206, March.
    10. Richard B. Freeman, 1995. "Are Your Wages Set in Beijing?," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 15-32, Summer.
    11. Gilroy, Bernard Michael, 1991. "Faktorgehalt und internationaler Handel
      [Factor content and international trade]
      ," MPRA Paper 21037, University Library of Munich, Germany.
    12. J. Neary, 2006. "International Trade and the Environment: Theoretical and Policy Linkages," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(1), pages 95-118, January.
    13. Devereux, John & Connolly, Michael, 1996. "Commercial policy, the terms of trade and the real exchange rate revisited," Journal of Development Economics, Elsevier, vol. 50(1), pages 81-99, June.
    14. Pantzios, Christos J. & Taylor, Timothy G., 1998. "Trade Liberalization And Japanese Agricultural Import Policies," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(02), December.
    15. Luca Salvatici & Alessandro Antimiani & Fusacchia Ilaria, 2018. "Value Added Trade Restrictiveness Indexes. Measuring Protection Within Global Value Chains," Departmental Working Papers of Economics - University 'Roma Tre' 0238, Department of Economics - University Roma Tre.
    16. Daniel M. Bernhofen & John C. Brown, 2016. "Testing the General Validity of the Heckscher-Ohlin Theorem," American Economic Journal: Microeconomics, American Economic Association, vol. 8(4), pages 54-90, November.

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