Testing the general validity of the Heckscher-Ohlin Theorem: the natural experiment of Japan
We exploit Japan's 19th century opening up to trade to test a general formulation of the Heckscher-Ohlin theorem. This formulation is based on Ohlin's measure of factor scarcity where autarky factor prices impose a refutable prediction on the economy's factor content of trade. Our test combines factor price data in Japan's autarky period with commodity trade data and a technology matrix in Japan's early free trade period. Our technology matrix is derived from a major Japanese survey of agricultural techniques during the early Meiji period, accounts by European visitors and numerous studies by Japanese and western scholars that draw on village records, business accounts and other historical sources. Evaluating Japan's factor content of trade during 1868-1875 at the corresponding autarky factor prices, we fail to reject the Heckscher-Ohlin prediction in each sample year.
|Date of creation:||Apr 2009|
|Note:||March 31, 2009|
|Contact details of provider:|| Postal: 2-1 Naka, Kunitachi City, Tokyo 186-8601|
Web page: http://www.econ.hit-u.ac.jp/~cces/
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- Bowen, Harry P & Leamer, Edward E & Sveikauskas, Leo, 1987.
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- A. D. Woodland, 1980. "Direct and Indirect Trade Utility Functions," Review of Economic Studies, Oxford University Press, vol. 47(5), pages 907-926.
- Daniel M. Bernhofen & John C. Brown, 2005. "An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan," American Economic Review, American Economic Association, vol. 95(1), pages 208-225, March.
- Osamu Saito & Tokihiko Settsu, 2006. "Money, credit and Smithian growth in Tokugawa Japan," Hi-Stat Discussion Paper Series d05-139, Institute of Economic Research, Hitotsubashi University.
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