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On Measurements of the Factor Content of Trade: - The Case of Sweden

  • Widell, Lars

    (Department of Business, Economics, Statistics and Informatics)

In this paper we evaluate different measurement practices when calculating the human capital content of a country's net trade. The calculations are performed using a structural measure developed by Lundberg & Wiker (1997) that relates the average factor input requirements in exports relative to those in imports. We find the calculations highly dependent on measurement practice when performing those on a cross-section for a single year. However, when calculating the human capital content of trade over time instead, the inclusion of service sectors in the trade vector as well as variable factor input requirements seem to be very important. This paper then continues with an empirical evaluation of the human capital content of Swedish trade in 1986-2000. We find that during the period 1986-1992, the average human capital intensity in exports relative to imports was slightly increasing, mirroring an increased specialization in human capital-intensive production. After 1992, though, there is a rapid decrease in the human capital content of trade in exports relative to imports. In 1995 there is a recovery, but the recovery seems both to be leveling out and turning down in the late 1990's. In this paper we also draw the conclusion that a well functioning educational system is important for a country's comparative advantage.

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Paper provided by Örebro University, School of Business in its series Working Papers with number 2005:7.

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Length: 41 pages
Date of creation: 12 Aug 2005
Date of revision:
Handle: RePEc:hhs:oruesi:2005_007
Contact details of provider: Postal: Örebro University School of Business, SE - 701 82 ÖREBRO, Sweden
Phone: 019-30 30 00
Fax: 019-33 25 46
Web page: http://www.oru.se/Institutioner/Handelshogskolan-vid-Orebro-universitet/
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  1. Donald R. Davis & David E. Weinstein, 2002. "Do factor endowments matter for north-north trade?," Discussion Papers 0102-03, Columbia University, Department of Economics.
  2. Gordon H. Hanson & Robert C. Feenstra, 2000. "Aggregation Bias in the Factor Content of Trade: Evidence from U.S. Manufacturing," American Economic Review, American Economic Association, vol. 90(2), pages 155-160, May.
  3. Deardorff, Alan V, 1982. "The General Validity of the Heckscher-Ohlin Theorem," American Economic Review, American Economic Association, vol. 72(4), pages 683-94, September.
  4. Keith Maskus & Catherine Sveikauskas & Allan Webster, 1994. "The composition of the human capital stock and its relation to international trade: Evidence from the US and Britain," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 130(1), pages 50-76, March.
  5. Harry P. Bowen & Edward E. Leamer & Leo Sveikauskas, 1986. "Multicountry, Multifactor Tests of the Factor Abundance Theory," NBER Working Papers 1918, National Bureau of Economic Research, Inc.
  6. Bradford J Jensen & Andrew B Bernard, 1994. "Exporters, Skill Upgrading And The Wage Gap," Working Papers 94-13, Center for Economic Studies, U.S. Census Bureau.
  7. Donald R. Davis & David E. Weinstein, 2001. "The Factor Content of Trade," NBER Working Papers 8637, National Bureau of Economic Research, Inc.
  8. Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, vol. 85(5), pages 1029-46, December.
  9. Leamer, Edward E, 1980. "The Leontief Paradox, Reconsidered," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 495-503, June.
  10. Donald R. Davis & David E. Weinstein, 1998. "An Account of Global Factor Trade," NBER Working Papers 6785, National Bureau of Economic Research, Inc.
  11. Peter B. Kenen, 1965. "Nature, Capital, and Trade," Journal of Political Economy, University of Chicago Press, vol. 73, pages 437.
  12. Webster, Allan, 1993. "The Skill and Higher Educational Content of UK Net Exports," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(2), pages 141-59, May.
  13. Brecher, Richard A & Choudhri, Ehsan U, 1982. "The Leontief Paradox, Continued," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 820-23, August.
  14. Leamer, E. & Levingsohn, J., 1994. "International Trade Theory: The Evidence," Working Papers 368, Research Seminar in International Economics, University of Michigan.
  15. 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 421-46, June.
  16. Deardorff, Alan V., 1984. "Testing trade theories and predicting trade flows," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 10, pages 467-517 Elsevier.
  17. Trefler, Daniel, 1993. "International Factor Price Differences: Leontief Was Right!," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 961-87, December.
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