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An Account of Global Factor Trade

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  • Davis, D.R.
  • Weinstein, D.E.

Abstract

A half-century of empirical work on the factor proportions theory has but has failed to devise simple amendments that bring theory and data into reasonable congruence. Our study considers standard and novel hypotheses regarding the failures of the Heckscher-Ohlin-Vanek formulation and is the first to examine these directly on the technology and absorption data of interest. We show how a few simple and plausible amendments, verified directly by this data, suffice for a striking confirmation of the HOV theory. Countries export the services of abundant factors and in approximately the right magnitude. HOV works.

Suggested Citation

  • Davis, D.R. & Weinstein, D.E., 1999. "An Account of Global Factor Trade," Working Papers 435, Research Seminar in International Economics, University of Michigan.
  • Handle: RePEc:mie:wpaper:435
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    More about this item

    Keywords

    INTERNATIONAL TRADE;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F10 - International Economics - - Trade - - - General

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