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The Heckscher-Ohlin Model Between 1400 and 2000: When It Explained Factor Price Convergence, When It Did Not, and Why

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  • O'Rourke, Kevin Hjortshøj
  • Williamson, Jeffrey G

Abstract

There are two contrasting views of pre-19th century trade and globalization. First there are the world history scholars like Andre Gunder Frank who attach globalization ‘big bang' significance to the dates 1492 (Christopher Columbus stumbles on America in search of spices) and 1498 (Vasco da Gama makes an end run around Africa snatching monopoly rents away from Arab and Venetian spice traders). Such scholars are on the side of Adam Smith who believed that these were the two most important events in recorded history. Second, there is the view that the world economy was still fragmented before the 19th century. This paper offers a novel way to discriminate between these competing views and we use it to show that there is no evidence that the Ages of Discovery and Commerce had the economic impact on the global economy the world historians assign to them, while there is plenty of evidence of a very big bang in the 19th century. The test involves a close look at the connections between factor prices, commodity prices and endowments world-wide.

Suggested Citation

  • O'Rourke, Kevin Hjortshøj & Williamson, Jeffrey G, 2000. "The Heckscher-Ohlin Model Between 1400 and 2000: When It Explained Factor Price Convergence, When It Did Not, and Why," CEPR Discussion Papers 2372, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2372
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    References listed on IDEAS

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    Cited by:

    1. Rassekh, Farhad, 2010. "Is Stolper-Samuelson dangerous and FPE a failure?," International Review of Economics & Finance, Elsevier, vol. 19(4), pages 555-561, October.
    2. Mandelman, Federico S. & Zlate, Andrei, 2012. "Immigration, remittances and business cycles," Journal of Monetary Economics, Elsevier, vol. 59(2), pages 196-213.
    3. Ekeland, Ivar & Guesnerie, Roger, 2010. "The geometry of global production and factor price equalisation," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 666-690, September.
    4. David Mayer-Foulkes, 2008. "Economic Challenges for Global Governance," Working papers DTE 428, CIDE, División de Economía.
    5. Jeffrey G. Williamson, 2000. "Land, Labor and Globalization in the Pre-Industrial Third World," NBER Working Papers 7784, National Bureau of Economic Research, Inc.
    6. Ivar Ekeland & Roger Guesnerie, 2006. "The geometry of global production and factor price equalisation," Working Papers halshs-00589105, HAL.
    7. Varma, Sumati & Bagoria, Mukesh, 2012. "Diasporas and international entrepreneurship – evidence from the Indian IT industry," MPRA Paper 47207, University Library of Munich, Germany.

    More about this item

    Keywords

    Factor Prices; Globalization; History;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative

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