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Explaining Trade Flows: Traditional and New Determinants of Trade Patterns

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  • Gourdon, Julien

    () (World Bank)

Abstract

An empirical tradition in international trade seeks to establish whether the predictions of factor abundance theory match with the data. In this paper, we test if the “new” determinants used in the factor content version of H-O-V models (differences in productivity, in returns to scale or in consumers’ preferences) help us to improve our estimation of trade patterns in commodities. The results show that conventional factors are still important in determining trade structure although new determinants need to be included to determine comparative advantage. Turning to the change across periods, differences in factor endowments have not diminished over time: we observe an increase in specialization according to skill endowment. Hence, those “new” determinants are not new forces that drive trade flows.

Suggested Citation

  • Gourdon, Julien, 2009. "Explaining Trade Flows: Traditional and New Determinants of Trade Patterns," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 24, pages 53-86.
  • Handle: RePEc:ris:integr:0465
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    References listed on IDEAS

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    1. Timothy J. Kehoe, 2003. "An evaluation of the performance of applied general equilibrium models of the impact of NAFTA," Staff Report 320, Federal Reserve Bank of Minneapolis.
    2. Hummels, David, 1999. "Toward a Geography of Trade Costs," GTAP Working Papers 1162, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    3. Michael Rolleigh, 2004. "Plant Heterogeneity and Applied General Equilibrium Models of Trade: Lessons from the CA-US FTA," 2004 Meeting Papers 360, Society for Economic Dynamics.
    4. Timothy J. Kehoe, 1996. "Social accounting matrices and applied general equilibrium models," Working Papers 563, Federal Reserve Bank of Minneapolis.
    5. Shoven, John B & Whalley, John, 1984. "Applied General-Equilibrium Models of Taxation and International Trade: An Introduction and Survey," Journal of Economic Literature, American Economic Association, vol. 22(3), pages 1007-1051, September.
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    Cited by:

    1. Julie Regolo, 2013. "Export Diversification: How Much Does the Choice of the Trading Partner Matter?," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 13072, Institut d'Economie et Econométrie, Université de Genève.
    2. Regolo, Julie, 2013. "Export diversification: How much does the choice of the trading partner matter?," Journal of International Economics, Elsevier, vol. 91(2), pages 329-342.
    3. Hanousek, Jan & Kočenda, Evžen, 2014. "Factors of trade in Europe," Economic Systems, Elsevier, vol. 38(4), pages 518-535.

    More about this item

    Keywords

    international trade; Hecksher-Ohlin model;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F20 - International Economics - - International Factor Movements and International Business - - - General

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