IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/7411.html
   My bibliography  Save this paper

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

Author

Listed:
  • Kevin H. O'Rourke
  • Jeffrey G. Williamson

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 Colombus stumbles on the Americas in search of spices) and 1498 (Vasco da Gama makes an end run around Africa and snatches monopoly rents away from the 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 fragmented and completely de- globalized before the 19th century. This paper offers a novel way to discriminate between these two 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 that 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

  • Kevin H. O'Rourke & Jeffrey G. Williamson, 1999. "The Heckscher-Ohlin Model Between 1400 and 2000: When It Explained Factor Price Convergence, When It Did Not, and Why," NBER Working Papers 7411, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:7411
    Note: DAE ITI
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w7411.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Taylor, Alan M., 1999. "Sources of convergence in the late nineteenth century," European Economic Review, Elsevier, vol. 43(9), pages 1621-1645, October.
    2. O'Rourke, Kevin & Williamson, Jeffrey G., 1994. "Late Nineteenth-Century Anglo-American Factor-Price Convergence: Were Heckscher and Ohlin Right?," The Journal of Economic History, Cambridge University Press, vol. 54(04), pages 892-916, December.
    3. Maurice Obstfeld, 1993. "International Capital Mobility in the 1990s," NBER Working Papers 4534, National Bureau of Economic Research, Inc.
    4. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    5. Maurice Obstfeld & Alan M. Taylor, 1998. "The Great Depression as a Watershed: International Capital Mobility over the Long Run," NBER Chapters,in: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, pages 353-402 National Bureau of Economic Research, Inc.
    6. Irwin, Douglas A, 1991. "Mercantilism as Strategic Trade Policy: The Anglo-Dutch Rivalry for the East India Trade," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1296-1314, December.
    7. Taylor, Alan M. & Williamson, Jeffrey G., 1997. "Convergence in the age of mass migration," European Review of Economic History, Cambridge University Press, vol. 1(01), pages 27-63, April.
    8. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
    9. Wood, Adrian, 1995. "North-South Trade, Employment and Inequality: Changing Fortunes in a Skill-Driven World," OUP Catalogue, Oxford University Press, number 9780198290155.
    10. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    11. O'Rourke, Kevin H & Taylor, Alan M & Williamson, Jeffrey G, 1996. "Factor Price Convergence in the Late Nineteenth Century," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(3), pages 499-530, August.
    12. Huber, J Richard, 1971. "Effect on Prices of Japan's Entry into World Commerce after 1858," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 614-628, May-June.
    13. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119.
    14. Fogel, Robert William, 1967. "The Specification Problem in Economic History," The Journal of Economic History, Cambridge University Press, vol. 27(03), pages 283-308, September.
    15. O'Rourke Kevin, 1994. "The Repeal of the Corn Laws and Irish Emigration," Explorations in Economic History, Elsevier, vol. 31(1), pages 120-138, January.
    16. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    17. Matthew J. Slaughter, 1995. "The Antebellum Transportation Revolution and Factor-Price Convergence," NBER Working Papers 5303, National Bureau of Economic Research, Inc.
    18. Williamson, Jeffrey G., 1990. "The impact of the Corn Laws just prior to repeal," Explorations in Economic History, Elsevier, vol. 27(2), pages 123-156, April.
    19. Temin, Peter, 1966. "Labor Scarcity and the Problem of American Industrial Efficiency in the 1850's," The Journal of Economic History, Cambridge University Press, vol. 26(03), pages 277-298, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services

    NEP fields

    This paper has been announced in the following NEP Reports:

    Lists

    This item is featured on the following reading lists or Wikipedia pages:
    1. Model Heckscher–Ohlin in Wikipedia Indonesian ne '')
    2. Heckscher–Ohlin model in Wikipedia English ne '')
    3. ヘクシャー=オリーン・モデル in Wikipedia Japanese ne '')

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:7411. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.