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Factor Proportions, Linkages and the Open Developing Economy

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  • Riedel, James

Abstract

The purpose of this paper is to examine the theoretical rationale underlying the growth of footloose, import-dependent industry observed in many of the most successful developing countries (Hong Kong, Taiwan, S. Korea, for example). A second objective is to develop empirical formulations appropriate for analyzing the resource allocation consequences of a footloose industrial structure in a developing country. It is argued that previous applications of input-output techniques to factorintensity measurement have in general ignored the implications of trade in intermediate inputs. The Leontief test of the Heckscher-Ohlin trade theory is perhaps the first and certainly the most widely adopted application of input-output techniques to the measurement of the factor intensity of production. The first section of this paper will attempt to demonstrate that the procedure developed by Leontief is not strictly appropriate in an open economy which utilizes imported as well as domestically supplied inputs. An alternative formulation is developed in this paper, which when compared to the Leontief formulation yields a measure of the domestic resource cost or saving resulting from the use of imported rather than domestically produced inputs.
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Suggested Citation

  • Riedel, James, 1975. "Factor Proportions, Linkages and the Open Developing Economy," The Review of Economics and Statistics, MIT Press, vol. 57(4), pages 487-494, November.
    • Handle: RePEc:tpr:restat:v:57:y:1975:i:4:p:487-94
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    Cited by:

    1. Tandon, Anjali, 2020. "Linkages and changing factor use in Indian economy: Implications of emerging trade pattern," MPRA Paper 113633, University Library of Munich, Germany.
    2. Gregory Schmid & Owen Phillips, 1980. "Textile trade and the pattern of economic growth," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 116(2), pages 294-306, June.
    3. Prema-chandra Athukorala, 2006. "Outward-oriented Policy Reforms and Industrialisation," Journal of South Asian Development, , vol. 1(1), pages 19-49, April.
    4. Tandon, Anjali, 2022. "Employment implications of India’s international trade – A macro view based on Input-Output analysis," MPRA Paper 112778, University Library of Munich, Germany.
    5. Öner Günçavdi & Suat KüçükçifçI & Andrew McKay, 2003. "Adjustment, Stabilisation and the Analysis of the Employment Structure in Turkey: An Input- Output Approach," Economic Change and Restructuring, Springer, vol. 36(4), pages 315-331, December.
    6. Kien Trung Nguyen, 2014. "The impact of trade and investment liberalization on the wage skill premium: evidence from Vietnam," Departmental Working Papers 2014-20, The Australian National University, Arndt-Corden Department of Economics.
    7. Anjali Tandon, 2022. "Linkages and changing factor use in Indian economy: Implications of emerging trade pattern," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 24(2), pages 266-294, December.
    8. Prema-Chandra Athukorala & Bambang H. Santosa, 1996. "Gains from Export Growth: Do Linkages Matter?," Trade and Development 96/13, Australian National University, Department of Economics.
    9. Banerji, Ranadev, 1976. "Technology, economies of scale and average size of industrial plants: Some further cross-country evidence," Kiel Working Papers 50, Kiel Institute for the World Economy (IfW Kiel).
    10. Tandon, Anjali, 2022. "Assessing structural coherence with factor proportions of tradable sectors in Indian economy," MPRA Paper 112779, University Library of Munich, Germany.
    11. Wannaphong Durongkaveroj, 2021. "Should high domestic value added be policy emphasis in the era of global production sharing?: Evidence from Thailand," Economics Bulletin, AccessEcon, vol. 41(3), pages 1631-1641.
    12. Tandon, Anjali, 2019. "Assessing Factor Proportions in Tradable Sectors of the Indian Economy," MPRA Paper 99135, University Library of Munich, Germany.
    13. Foders, Federico, 1983. "Industriegüterexport und Faktorproportionenhypothese: Untersuchung am Beispiel der Exportstruktur Argentiniens," Open Access Publications from Kiel Institute for the World Economy 439, Kiel Institute for the World Economy (IfW Kiel).
    14. Bela Balassa, 1978. "Export incentives and export performance in developing countries: A comparative analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 114(1), pages 24-61, March.
    15. Mita Bhattacharya & Kien Trung Nguyen, 2019. "Trade liberalization and the wage–skill premium: Evidence from Vietnamese manufacturing," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 27(2), pages 519-540, February.
    16. Tandon, Anjali, 2020. "Revisiting Factor Proportions in the Indian Economy – A Study with Focus on Tradable Sectors," MPRA Paper 112773, University Library of Munich, Germany.

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