a dual definition for the factor content of trade and its effect on factor rewards in us manufacturing sector we introduce a dual definition of the factor content of trade fct using the concept of the equivalent autarky equilibrium estimating a symmetric normalized quadratic revenue function for the u s manufacturing sector between 1965 and 1991 we find that the fct for capital is positive while the fct for skilled and unskilled labor is negative suggesting that the leontief paradox is not present then the growth rate of the factor rewards is decomposed to the fct endowments and technological change effects we find that technological change is the most important determinant in explaining wage inequality between skilled and unskilled labor

technology factor proportions and competitiveness the paper reports an attempt to explain changes in the industrial pattern of relative international competitiveness and specialization in the swedish manufacturing industry during the period 1969 84 in particular we evaluate the role of rd this was true for industries intensive in human as well as physical capital the analysis confirmed the technology gap hypothesis in that a high level of rd on the other hand no indication was found of increased international specialization on r d intensive products in swedish industry

factor endowments factor proportions and the allocative efficiency of u s interregional trade the heckscher ohlin h o theory of trade has been subjected to numerous international tests based upon the empirical evidence presented in the literature it appears that the theory s explanatory power of the actual pattern of international trade is somewhat limited this may not be surprising however when one considers a host of extraneous factors such as tariffs quotas and other policy and institutional barriers to trade which distort the pattern of trade on the other hand some of the requisites of the h o theory are more nearly satisfied in interregional trade within a nation the extent of policy distortions on the overall pattern of commodity trade should be far less in interregional trade than in international trade likewise both production technologies and demand conditions assumed to be identical between nations in the h o theory should be more nearly so among regions within a nation while the theoretical basis of regional trade is of course the same as that of international trade it is primarily for these reasons that a number of researchers have more recently turned to interregional trade for the purpose of testing the h o theory the current literature on the u s regional comparative advantage includes the contributions by moroney and walker 1966 moroney 1972 1975 estle 1967 and klaasen 1973 whereas these studies focused primarily on the pattern of regional production as revealed by value added concentration ratios for the u s south the major objectives of this paper are i to design and perform factor proportion tests based upon the actual interregional pattern of trade and ii to investigate one neglected empirical aspect of the h o theory bearing upon the substitutive role that commodity trade plays for direct factor mobility in section ii we present estimates of the regional distribution of major input supplies in the united states the input classes considered are capital equipment human capital labor and renewable and nonrenewable natural resources in particular we have found that there are fairly distinct differences among u s census regions pertaining to relative aggregate input supplies defined by physical capital labor ratio human capital labor ratio renewable natural resource labor ratio and nonrenewable resource labor ratio section iii presents the methodology and major empirical findings of the factor proportions test as adapted to interregional trade section iv extends the analysis to consider an alternative hypothesis of the h o theory based on the substitutive relationship between direct factor movements and commodity trade as embedded in the original h o theory this aspect of the theory has not been explicitly dealt with in the empirical literature and we consider its practical implication concerning the allocative efficiency of trade a summary section concludes the paper

factor proportions in israel s manufacturing trade 1965 1982 abstract this paper tries to explain changes in the foreign trade patterns of israel s manufacturing sector in terms of changes in relative factor use during the period 1965 1982 although the sector s comparative advantage lay in labor intensive goods in most of this period changes in net exports were correlated positively with changes in human and physical capital use and negatively with changes in labor use this was due to the expansion of capital intensive exports

domestic trade and transportation costs as barriers to international trade available evidence indicates that costs of nontraded services in domestic transportation wholesaling and retailing domestic margins are higher if a good is shipped in international trade than if it is shipped from domestic producers to domestic consumers consequently domestic margins appear to act as natural barriers to trade in the same manner as international transp ort costs do this paper presents estimates of the barriers that the domestic margins impose against u s imports and shows that they exc eed the barriers imposed by tariffs and international transport costs combined

estimating the employer switching costs and wage responses of forward looking engineers this article estimates worker switching costs and how much the employer switching of experienced engineers responds to outside wage offers i use data on engineers across swedish private sector firms to estimate the relative importance of employer wage policies and switching costs in a dynamic programming discrete choice model of employer choice the differentiated firms are modeled in employer characteristic space and each firm has its own age wage profile a majority of engineers have moderately high switching costs and a minority of experienced workers are responsive to outside wage offers younger workers are more sensitive to outside wage offers

transaction taxes in a search model of the housing market abstract we incorporate transaction taxes in a housing market search model with endogeneous house prices and show that these taxes unambiguously create lock in effects that reduce welfare the lock in effects are larger at low vacancy rates seller taxes raise prices and buyer taxes lower them and this asymmetry helps to explain the differences in the welfare effects of the two taxes lock in effects are smaller with a buyer tax since the price reduction dampens the negative effect on search effort caused by the tax

the taxpayer relief act of 1997 and homeownership is smaller now better i introduction while there is a lengthy literature on the u s tax code s mortgage interest deduction and property tax deduction less attention has been paid to the capital gains tax treatment of owner occupied housing prior to 1997 the u s federal income tax code allowed home sellers to roll over capital gains taxes from the sale of a home if they bought up that is if they purchased another house within 2 years that was at least as expensive as their previous home in 1996 the u s office of management and budget omba estimated tax expenditures of 14 4 billion from this deferral rollover of capital gain taxation home sellers over the age of 55 were treated differently than those under 55 as they received a one time capital gains tax exclusion from the sale of an owner occupied home of up to 125 000 a tax expenditure of 5 2 billion 1 to give some perspective the tax expenditure associated with the deductibility of state and local property taxes was estimated to be 15 9 billion and the expenditure from the deductibility of mortgage interest payments was 47 5 billion in 1996 1 the passage of the taxpayer relief act of 1997 tra97 eliminated the differential treatment of home sellers over and under the age of 55 after 1997 the first 250 000 500 000 in capital gains from the sale of a single married owner occupier s primary residence is tax exempt regardless of the home seller s age and whether they purchase more or less housing following the sale of their residence for most home sellers this effectively eliminates capital gains taxation from the sale of a primary residence as the median home price was less than the exclusion amount 2 in addition tra97 lowered the marginal tax rate applied to long term capital gains from any assets including housing incentives created by the federal tax code prior to 1997 for home sellers under the age of 55 to purchase a more expensive house than their previous one or buy up to defer capital gains taxes have been of particular interest to economists if instead a home seller bought a less expensive home or bought down and had a capital gain taxes were paid on the difference between the values of the two homes up to the maximum of the capital gain thus for home sellers incentives to buy more expensive homes were created in addition to the incentive to buy up the differential tax treatment of home sellers under 55 from those older than 55 may lead to a lock in effect the incentive for a homeowner under 55 to defer selling her home if she desires a less expensive one consistent with shan 2011 this creates mismatch in the housing market as homeowners choose to reside in homes that no longer reflect their housing demand in an effort to avoid taxation of capital gains this being the case the post tra97 taxation of capital gains is expected to increase the likelihood that a homeowner younger than 55 moves to less expensive housing while it is true that home sellers over the age of 55 were affected by tra97 as it increased the level of capital gains exempt from taxation and lowered capital gains tax rates we do not expect the impact of these changes to lead to as significant behavioral changes for home sellers older than 55 as the behavioral changes for those under 55 3 exploiting the fact that tra97 differentially affects those over and under 55 allows identification of some of the effects it has had on the housing market specifically this allows us to see if home sellers under the age of 55 who are no longer locked in to their current level of housing consumption bought less expensive housing or moved down after 1997 reducing mismatch rather than focusing on all home sellers under the age of 55 to provide better comparison with home sellers over the age of 55 we focus on home sellers between the age of 50 and 54 and compare with home sellers between the ages of 56 and 60

the direction of developing country trade empirical evidence of differences between south south and south north trade abstract declining market opportunities in northern markets led to views that greater south south trading might provide an alternative growth stimulus this paper analyses the characteristics of south south trade in manufactures and recent changes in the level of such trade to help clarify the potential of greater self reliance within the south south south trade is found to be more intensive in the use of both physical and human capital hence less rational from the static comparative advantage viewpoint than south north trade there is indirect but strong evidence that exporting countries with greatest orientation towards the south are those with greater distortions less rapid movements up the ladder of comparative advantage and weaker export performance finally it is observed that the recent boom in south south trade is largely explained by simple market size effects very rapid growth of rich oil exporters and the faster gnp growth of developing compared to developed countries the paper concludes that while south south trade of about the present magnitude one of greater developing country exports is certainly rational there is little evidence to support views that greater south south trade should be especially promoted arguments of dynamic comparative advantage may favor south south trade but so far these have been more speculative and not yet well researched empirically

taxation of capital gains on owner occupied homes the paper compares taxation on realization with taxation on accrual in the context of owner occupied housing it considers a model where the utility a household derives from housing relative to other consumption varies over the life cycle as there are sizeable transaction costs housing consumption will not even in the absence of taxes be adjusted continuously but at discrete intervals the focus of the paper is on tax effects on the length of these intervals the following results are shown u taxing true economic appreciation at the same rate as imputed rental income and other capital income will lead to a shortening of the intervals if the capital gains are taxed on accrual an increase in this tax rate holding other rates constant will lead to a shortening of the intervals if the capital gains are taxed only as they are realized an increase in this tax rate holding other rates constant may either lead to a lengthening or a shortening of the holding period shortening is more likely if transaction costs are large whereas lengthening will occur if the rate of price increase is high

determinants of the structure of u s foreign trade 1958 1976 abstract the heckscher ohlin model with three direct factor inputs is borne out for u s net exports of manufactures in annual cross section regressions for 1958 1976 the coefficient on unskilled labor became significantly more negative over the period and there is evidence that the negative sign on physical capital may reflect the inclusion of natural resource industries further analysis based upon 1960 and 1970 census years suggests the importance as well of skill and technological variables calculations of the total factor requirements of u s trade uphold the leontief paradox for 1958 but not for 1972

trade education and growth the small country case this paper develops optimal educational and trade policies for a small open economy capable of growth a theoretical structure previously used for the analysis of education and growth in closed economies manning 1975 1976 1978 1979a 1979b 1981b is extended to do this the analysis is aggregative it differs from that of a similar problem by aarrestad 1978 by allowing for heterogeneity of the labor force recently henry 1979 and henry and manning 1980 developed the model of this paper to permit the endogenous determination of international commodity prices but only in the context of balanced growth all of these papers belong to a small literature on aggregative aspects of education and growth other examples of which include aarrestad 1975 hu 1976 razin 1972a 1972b tu 1969 1970 and uzawa 1965 oniki and uzawa 1965 is the classic extension of the heckscher ohlin theory of international trade to permit growth in models of their type production possibilities are given instantaneously and are altered over time by factor accumulation educational policy affects the production possibility set in two ways an increase in educational activity reduces the factors available to produce traded goods and so shrinks the production possibility set immediately in the longer term the level of skill is altered so changing the production possibility set both the size and shape of the production possibility set are determined statically and dynamically by educational policy mcmillan 1978 has recently presented a model of public intermediate goods trade and growth with the same property a problem like this is considered in manning 1981a for a general model of capital accumulation and growth the structure of this paper is as follows the model and optimality conditions are first presented growth is then analyzed and it is found that specialization is the most likely pattern of production a deeper investigation of the economics of the model explains this conclusion some concluding remarks are then made details of the lengthy mathematical proofs of two propositions are relegated to a mathematical appendix

comparative advantage geographic advantage and the volume of trade a functional relationship between the degree of a country s comparative advantage and the volume of its net exports of any good to its trading partner is established using a model with per unit distance transportation costs between countries coasts and their interiors the greater a country s comparative advantage the deeper its exports penetrate geographically into its trading partner the internal spatial structure of a country consists of cities on a river it is shown that population sizes wage rates and residential rental rates are greatest in the port city and decline monotonically as one moves inland copyright 1991 by royal economic society

arming as a strategic investment in a cooperative equilibrium to develop a positive economic theory of military spending this analysis focuses on a game theoretic general equilibrium model of international conflict in which consumption peaceful investment and military spending are endogenously determined the analysis illustrates that when there is repeated interaction between nations a game of threats and punishments generally will not support a disarmament outcome and that fluctuations in military spending can be an endogenous result of fluctuations in aggregate economic activity furthermore the analysis shows how the relation between aggregate economic activity and military spending qualitatively depends on whether governments are acting opportunistically or cooperatively copyright 1990 by american economic association

immiserizing investment from abroad the singer prebisch thesis reconsidered the present paper lends new analytical support to the controversial singer prebisch thesis according to this well known thesis less developed countries ldcs suffer a welfare loss from secular decline in their international terms of trade for primary product exports the standard theoretical criticism of the thesis makes two basic arguments both relating to the impact of economic expansion 2 first there is no well established presumption that the terms of trade for primary products will indeed deteriorate in a growing world economy second if domestic economic expansion does happen to worsen the terms of trade for ldcs economic welfare of these countries still need not deteriorate except under bhagwati s 1958 well known conditions for immiserizing growth thus the traditional critique sees the singer prebisch thesis as an unconvincing allegation about the relationship between growth and welfare via the terms of trade the following discussion suggests an alternative more favorable interpretation of the thesis this reinterpretation focuses upon the process of foreign investment4 rather than economic growth as the essential reason for adverse changes in the terms of trade and level of welfare for ldcs exporting primary products such a focus appears to be fully consistent with the analysis of singer 19501 5 whose main

industrialisation and the factor content of latin american exports of manufactures this article shows that latin american exports of manufactures that grow consistently over time arise from both traditional as well as policy induced sources of comparative advantage case studies for argentina colombia and venezuela show that manufactures originally developed for the domestic market were exported with consistent growth rates and came to represent an important proportion of total manufacturing exports the study also shows that inter country differences in the factor content of these exports reflect both differences in original resource endowments as well as the effects of industrialisation policy

business ascendancy and economic impasse a structural retrospective on conservative economics 1979 87 conservatives have been waging economic revolution since the late carter years have they succeeded some argue in the affirmative pointing to lower rates of inflation and the long expansion since early 1983 insisting that the fundamentals are sound others argue in the negative emphasizing the huge twin trade and federal budget deficits and the financial fragility underscored by the october 1987 stock market crash warning that the party s over both sides of this argument concentrate primarily on short term phenomena in the 1980s neither pays much attention to the experience of the conservative regime since 1979 in long term historical perspective ronald reagan and the early architects of conservative economic policy made no such mistake they sought their place in the history books as institutional innovators not economic tinkerers in this light scrutiny of the usual cyclical macroeconomic indicators may miss far reaching changes in economic structure which promise a sustained economic expansion in years to come the budget and trade imbalances of the late 1980s for example may reflect nothing more than the growing pains of a new economic order whose long run prospects are as bright as the reagan administration promised had the economic record of the new deal been evaluated in the eighth year of roosevelt s presidency one may doubt that we would have found in the standard economic aggregates signs of the profound institutional changes which were to provide the foundations for the long postwar boom

external economies and trade an empirical analysis in recent international trade literature external economies are taking center stage as a determinant of comparative advantage in manufacturing industries several recent trade models have focused on learning or human capital development as the primary source of external economies a young develops a model of dynamic comparative advantage with external economies at the industry level based on learning curves r e lucas and n l stokey both focus on external effects of human capital accumulation at the societal level as an engine of growth and examine the trade and development implications 2 conducting empirical studies on models involving external effects of human capital poses the challenge of how to quantify such effects lucas suggests that the solution to this problem may be found by examining the urbanization economies inherent in cities 3 lucas is not alone in drawing a parallel between urban rural trade and international trade p r krugman exhorts trade economists to study local and regional trade as a guide to international specialization 4 like lucas krugman points to the possibilities of solving data problems if we want to understand international specialization a good place to start is with local specialization the data will be better and pose fewer problems of compatibility and the underlying economic forces will be less distorted by government policies 5 this study tests the ability of urban production data to explain international trade between the united states and developing countries a factor proportions model with external economies is used to explain trade patterns i use u s urban production data to measure the effect of differences in endowments of the factors generating external economies the model performs well the interesting result is the strength of the external factors as measured by the urban production variable in explaining international trade this result supports lucas s

international trade and domestic politics improving on rogowski s model of political alignments ronald rogowski s work offers valuable insight into the impact of changing trade exposure on domestic politics exploring the political implications of the well known factor endowments model of international trade theory rogowski argues that owners of relatively abundant productive factors will form a free trading coalition against owners of relatively scarce productive factors who will align in favor of protection rogowski s parsimonious three factor version of the factor endowments theory although offering valuable insight into the politics of less developed economies including today s developed economies in earlier centuries produces significant anomalies when applied to advanced economies intuitive logic and empirical research especially the leontief paradox suggest that the highly complex division of labor found in developed countries will confound the simplicity of the three factor model edward learner s multifactor model suggests solutions to the anomalies that afflict rogowski s simpler model when applied to recent politics in the united states and europe

a note on international trade and market structure as exports become an increasing part of industry sales the determinants of a firm s international position become increasingly important tests have supported single factors such as product life cycle lutz and green 1983 as well as multi factor models to explain the determinants of industry imports and exports stern and maskus 1981 harkness and kyle 1975 baldwin 1971 this study also presents a multi factor analysis of the determinants of u s trade patterns this study utilized the spi strategic planning institute data set which allows research at the business unit product line level results indicate that productivity and product development are the principal characteristics of high export percentage business units these findings are especially true for nonconsumer industries thus to the degree that business are concerned over the short term costs of product development direct or indirect for example insurance government aid may be required to promote u s export industries

capital gains taxation and residential mobility in sweden abstract theoretical studies have shown that capital gains taxes in the housing market may create lock in effects but so far no empirical evidence has been presented regarding the size of these effects for a panel of swedish house owners in 1984 1990 we show that lock in effects only appear for households with income reductions the size of these lock in effects crucially depends on the magnitude of the income loss the theoretical model and features of the swedish tax system imply that lock in effects depend on the degree of mismatch in the current residence and whether the households buy up or buy down

testing the demand side of comparative advantage models both the ricardian theory of comparative advantage and the more modern version often associated with the names of eli heckscher and bertil ohlin hereafter h o have been subjected to many empirical tests but the results of the tests have been mixed and on the whole inconclusive while the ricardian theory attributed the source of pretrade commodity price differences among nations to broadly specified production conditions as represented by factor labor productivity ratios the h o theory in its simpler version attributed the same to relative differences in factor endowments prevailing among different nations the two theories are broadly similar however in the sense that they both identify the ultimate source of comparative advantage on the supply side no crucial role is assigned by either theory to the demand side in the determination of comparative advantage 2 indeed the demand side is effectively neutralized at least in the standard h o model by the strategic and commonly made assumption that consumer preferences are internationally identical and homothetic 3 but how crucial is such an assumption particularly when there are many commodities with which almost all empirical tests of comparative advantage are concerned can the robustness of this assumption be established and hence its empirical relevance short of directly testing the assumption itself the existing literature has not dealt explicitly with these questions in the context of the comparative advantage issue there have also been other difficulties associated with testing the respective theories associate professor of economics tulane university i wish to acknowledge useful comments and suggestions i received from martin bronfenbrenner robert stern and the managing editor of this review on earlier versions of the paper i also gained from the comments of seminar participants at tohoku university the economics institute and the stockholm school of economics i alone remain responsible for any errors as is now widely known the pioneering work of testing the ricardian theory of trade was undertaken by g d a macdougall 1951 this was followed with substantively the same methodology by stern 1962 bela balassa macdougall et al mordechai kreinin and more recently with a somewhat different methodology by herbert glejser kreinin s study is particularly suggestive however in that the remarkably stable empirical relationships which were found in the earlier studies with american and british data do not extend to several other countries which he considered the first systematic attempt to test the h o theory was due to wassily leontief whose well known finding on the u s capital position caused a major controversy see robert baldwin for example for a perspective review of the leontief paradox leontief s work was followed with widely mixed results by masahiro tatemoto and shinichi ichimura donald wahl ranganath bharadwaj karl roskamp michael hodd and roskamp and gordon mcmeekin among others all of whom applied the input output technique for observations from additional countries more recently however a multivariate approach to testing the h o theory with diverse empirical specifications has been undertaken see for example gary c hufbauer william branson and helen junz baldwin edward leamer jon harkness and john kyle stern 1976 branson and nikolaos monoyios and harkness 2ohlin especially ch 1 emphasized the interplay of demand and supply conditions in the determination of commodity and factor prices the demand side appeared in many of ohlin s passages but it was never given as critical an importance as the supply side in his analysis of the cause of trade 3consumer preferences are said to be homothetic if indifference hypersurfaces have the same gradient for any consumption vector unique up to a scalar the direct implication of homothetic preferences is that income elasticities of demand are identically unitary for all goods it is of some interest to note however that john stuart mill also made a similar assumption in demonstrating his law of international values in a two commodity context ch 18 as pointed out by john chipman pp 484 85 mill s assumptions p 155 were tantamount to positing a utility function internationally identical of the form log u 6 log cl 62 log c2 where the ci s denote the units of consumption and the ai s are a set of parameters denoting consumption expenditure shares the assumption of internationally identical constant consumption expenditure shares often extended over many goods was also employed in modern works on the classical theory of trade see for example thomas whitin and lionel mckenzie

international capital mobility the factor content of trade and leontief paradoxes abstract in a world where capital is internationally mobile care is required in interpreting data on the factor content of trade us data for the 1960s seems to suggest that the us should have been abundantly endowed with labour relative to capital in comparison with the world as a whole ethier and svensson s 1986 j international economics 20 pp 21 42 work on international factor mobility provides the basis for an interesting re examination of such leontief paradoxes given that the us exports capital services directly its exports of goods would on average be intensive in its relatively abundant internationally immobile factors and thus need not be capital intensive

moving costs and housing demand abstract several recent housing demand studies use samples of recent movers based on the presumption that only such households are on their demand curves we find contrary to this presumption that the absolute values of the residuals from a standard housing demand equation fall with duration in the present dwelling this shows that the correlation pattern between housing and the explanatory variables at the moving date does not correspond to the average pattern over a typical housing spell we interpret this as evidence of forward looking behavior and show how it may be handled in econometric work with cross section samples

export performance in china s regional economies china enjoyed unprecedented economic growth in the 1980s and 1990s associated with this growth was the rapid expansion of exports from the chinese regions this study aims to provide an empirical assessment of export performance in the chinese regions during 1992 2001 it has shown that on an average china s regional economies have only achieved 70 of their export potential leaving substantial scope for improvement there is also considerable variation in export performance among the chinese regions with the noncoastal areas lagging behind in addition this article also shows that several region specific factors e g foreign direct investment government spending infrastructure development and the nonstate sector have affected regional export performance positively furthermore it is found that the development of china s western regions has boosted and will continue to improve the export sectors in these regions

measurement of the factor content of foreign trade with traded intermediate goods abstract in a recent article helpman 1984 develops readily testable bilateral restrictions in a model of international trade which preserves the spirit of heckscher ohlin trade theory important in any empirical exploration of the heckscher ohlin model is the decision of whether to employ direct or direct plus indirect calculations in determining the factor content of trade this paper extends helpman s analysis to a world of freely traded intermediate goods and shows that direct factor content calculations are the theoretically appropriate measure for use in evaluating these empirical implications of the heckscher ohlin model

new products and the factor content of international trade this paper extends the multicommodity two input version of the heckscher ohlin model to include new products on which considerable interest has been focused by the product cycle hypothesis and related analyses the extended model is then used to reexamine the implications of relative factor abundance for the capital and labor content of international commodity trade as this analysis shows the presence of new products might in principle resolve the leontief paradox under certain specific conditions

the leontief paradox continued according to leamer 1980 the leontief paradox is based on a simple conceptual misunderstanding in a multifactor version of the heckscher ohlin model he argues that a capital abundant country need not have its exports more capital intensive than its importsprovided that the country s commodity trade embodies a net export of both labor and capital services as was the case for the united states in leontief s 1954 data for such a country however the model does imply that capital per worker be greater in net exports than in consumption leamer finds that this implication is indeed consistent with leontief s data this note shows however that there is another feature of the trade data which is not so easily explained the fact that the united states exported labor services is in itself paradoxical as discussed below sec ii the model which leamer uses to explain the paradox implies that a country is a net exporter of labor services if and only if its aggregate expenditure per worker is less than that in the rest of the world this implication is clearly inconsistent with the evidence reviewed below in sec iii which shows that expenditure per worker was substantially greater in the united states than the rest of the world and yet the united states exported labor services therefore a modified version of the leontief paradox continues to stand

a specification test of the heckscher ohlin theory abstract under strong assumptions the heckscher ohlin model predicts not only that factor endowment differences alone determine trade patterns but that they do so in a particularly simple way the factor content of trade should be a linear function of national and world factor endowments the evident empirical shortcomings of this simple relationship need not however imply the more general empirical failure of endowment based trade theories this paper provides empirical evidence consistent with a more general endowment based model by showing that the strong heckscher ohlin relationship excludes important additional channels through which factor endowments affect the pattern of trade

comparative advantage in manufactured goods a re appraisal japanese input coefficients are used to investigate the pattern of comparative advantage in the exportation of manufactured products in a cross country framework estimates are made for the imports of manufactured products as well as for net exports also alternative techniques of estimation are utilized and an attempt to explain the residuals in the regression equations and to indicate the predictive power of these equations is made the paper shows that patterns of comparative advantage in manufactured goods can be explained by reference to commodity characteristics and country characteristics in turn intercountry differences in the extent of trade orientation the concentration of exports and foreign direct investment explain part of the residuals of the cross country regression equations finally it has been found that the method applied permits projecting the factor intensity of trade for individual countries

an empirical investigation of the heckscher ohlin theorem further empirical tests are required to substantiate or disprove the heckscher ohlin theorem because earlier tests were based on an incorrect test statistic a multi commodity two country two factor model is constructed to test the theorem and derive an appropriate test statistic the model provides testable hypotheses for trade based on its profit and wage content rather than on its capital and labour content the results show that the 1968 trade patterns for australia ireland japan korea new zealand and the united states support the heckscherohlin theorem while those of israel kenya and the united kingdom do not une etude empirique du theoreme heckscher ohlin il faut des tests empiriques additionnels pour decider si l on doit supporter ou renvoyer le theoreme de heckscher ohlin puisque les tests anterieurs ont ete eriges sur une statistique incorrecte les auteurs developpent un modele de commerce international pour deux pays deux facteurs de production et plusieurs biens afin de pouvoir confectionner un test approprie du theoreme le modele suggere des hypotheses veifiables construites a partir des variables profits et salaires plutot qu a partir de variables comme les coefficients d intensite en capital et en travail les resultats indiquent que les patterns de commerce en 1968 pour l australie l irlande le japon la nouvelle zelande et les etats unis tendent a supporter le theoreme heckscher ohlin alors que 1 experience du kenya et du royaume uni va dans l autre sens starting with leontief s seminal paper 1953 examinations of the factoral content of international trade have cast doubt on the reliability of the heckscher ohlin theorem in these studies patterns of trade between the rest of the world and the united states japan west germany and canada contradicted the theorem while those of east germany and india supported it bharadwaj 1962 leontief 1953 1956 roskamp 1961 stolper and roskamp 1961 tatemoto and ichimura 1959 and wahl 1961 as baldwin 1971 126 stated these results effectively destroyed the comfortable confidence of economists in the simple version of the heckscher ohlin trade theory they also provoked numerous articles advancing other ways to account for the pattern of a country s trade the test statistic used for these empirical studies of the heckscher ohlin theorem was developed by leontief and further applied by later investigators although it was never set within a theoretical framework no one questioned it until williams canadian journal of economics revue canadienne d economique xvii no 1 february fevrier 1984 printed in canada imprime au canada 0008 4085 84 0000 0032 1 50 1984 canadian economics association this content downloaded from 157 55 39 104 on mon 20 jun 2016 05 49 18 utc all use subject to http about jstor org terms empirical investigation of heckscher ohlin theorem 33 published his paper in 1970 in that work williams asserted that leontief s inference is incorrect the united states is plentiful in capital and he provided a model from which he derived a correct test statistic williams 1970 from a practical point of view a major limitation of williams s model is the assumption that trade is perfectly free and that factor prices will be equalized through trade more recent papers by deardorff 1979 and brecher and choudhri 1982 have suggested in a two country context at least that the factor content condition developed by williams should hold when factor prices are unequal and there are tariffs or other impediments to trade marxsen 1983 has demonstrated that such is the case and therefore that the williams condition should hold even if factor prices are unequal and trade is tariff ridden the purpose of this paper is to provide an empirical test of the heckscher ohlin theorem in the first section a multi commodity two country two factor model is constructed and an approprite test statistic is devised based on the profit and wage content rather than the capital and labour content of trade the second section presents the empirical test results for the 1968 trade patterns of the nine countries under study in the third section these results are considered in the light of previous work and conclusions are drawn about the heckscher ohlin theorem

labour skills and the uk s comparative advantage with its european union partners this paper assesses the extent and sources of the uk comparative advantage within the european union eu it finds that both inter industry and intra industry trade are important despite clear aggregation effects having established that there is a significant degree of inter industry specialization the sources of this are analysed using a factor content approach results are reported for aggregate factors of production and in the case of labour by disaggregated skill categories a key finding is that the uk s net trade with the eu is driven more by a specialization in specific types of skill than by an overall endowment of human capital the results also suggest that the inter industry specialization cannot be explained by comparative advantage alone

human capital and economic growth in a minimum wage economy an increased stock of physical capital within a brecher type minimum wage economy with skilled and unskilled labor may reduce national income in the short run however if capital accumulation stimulated the formation of human capital the long run level of national income can exceed its pregrowth level the conditions are derived under which such reversals occur it is also shown that correcting the distortions due to the minimum wage requires an additional instrument besides the economy wide employment subsidy a tax on the unskilled wage and an education subsidy are examined as possible second instruments copyright 1989 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

factor proportions and economic rationality in soviet inter national trade 1 955 1 968 in 1953 wassily leontief made the then startling discovery that the empirical structure of american factor proportions generated in bilateral exchange with the rest of the world contradicted the theoretically anticipated result based on the heckscher ohlin hypothesis using the logic of general equilibrium analysis in a two factor neoclassical model the heckscher ohlin theorem predicted that america being relatively abundantly endowed with capital would produce export goods that intensively embodied capital and import replacement goods intensively embodying the relatively scarce factor labor by applying the apparatus of input output analysis leontief showed that paradoxically american factor proportions exhibted precisely the opposite relationship to the one anticipated on the basis of the heckscher ohlin theorem leontief s finding initiated an avalanche of theoretical and empirical research directed towards unravelling the causal factors responsible for this unexpected and perverse result robert baldwin in a recent article surveyed the evolution of the factor proportions controversy and since all students of international trade can be expected to be reasonably familiar with the issues at stake we shall not review them here

the profitability of canadian defence contractors abstract in this paper we employ a simultaneous equations approach to test the hypothesis that firm profitability is affected by or affects the degree to which a firm is involved in defence contracting we find no evidence of any link between corporate profitability and defence contracting activity in canada moreover our data do not support the hypothesis that a positive effect of defence contracting is offset by the government pursuing a bailout contract award strategy based on the nature of the canadian defence procurement system we argue that our results indicate that the government has used its monopsony powers to restrict the rate of return earned on defence contracts to equal that earned in commercial operations thus firms which earn excess profits in commercial markets will also earn excess profits in defence markets

the interpretation of cross section regression tests of the heckscher ohlin theorem with many goods and factors abstract numerous authors have used cross section regression methods to explain interindustry variations in net exports by means of factor use ratios as one of the tests of the heckscher ohlin theorem this paper shows via an algebraic proof that the regression procedures used by these authors may be inappropriate tests of the heckscher ohlin theorem specifically the paper shows that in a framework of many goods and factors inferences about the relative abundance of a particular factor cannot be made by looking at the signs of the regression coefficients unless very stringent requirements are met

examining the leontief paradox in u s agricultural trade abstract factor intensity of united states agricultural trade is examined in the context of leontief s classic paradox using leontief s method as well as methods developed recently by leamer and others findings indicate that factor endowments are important determinants of u s agriculture s comparative advantage in trade as suggested by the heckscher ohlin theory

transaction costs capital gains taxes and housing demand abstract the paper considers the effect of transaction costs particularly in the form of capital gains taxes on the aggregate demand for owner occupied housing the framework is an overlapping generations model where consumers can avoid the transaction costs taxes by keeping the same house for both periods of life the first part of the paper analyzes the consumer s choice problem it distinguishes between costs that are fixed irrespective of the size of the house bought or sold and costs such as capital gains taxes that are related to the house value it is shown that higher transaction costs have lock in effects inducing consumers to keep the same house for both periods also it is found that under a wide variety of circumstances the amount of housing demanded will increase as the household is being locked in finally the paper looks at the effects on aggregate demand from an increase in capital gains taxes it is shown that an increased rate of taxation decreases demand for low tax rates but for high tax rates when lock in effects become important one generally gets the opposite effect high tax rates tend to increase housing demand

the kennedy round evidence on the regulation of international trade in the united states the purpose of this paper is to analyze and provide empirical evidence regarding the regulation of international trade flows our goal is to provide an explanation of the changes in the interindustry pattern of trade restrictions which emerged from the kennedy round of tariff negotiations the principal conclusion of the analysis is that the pattern of protection which resulted from the kennedy round was shaped to minimize the domestic political disruption resulting from liberalization industries which faced significant import threats and whose characteristics enhanced their potential political influence were able to maintain tariff protection in the face of overall liberalization the potential impact of the agreed upon tariff reductions was partially undermined by the introduction of offsetting nontariff trade barriers ntbs in addition ntbs were introduced systematically in industries that were becom

estimating housing consumption adjustments from panel data abstract although time series analysis of panel data has generally not been used in the study of housing demand longitudinal analysis provides the opportunity to increase our understanding of housing adjustments over time in particular time series analysis of housing choice using panel data permits appropriate use of both time series and cross sectional variation in housing prices provides the opportunity to separate age and cohort effects and facilitates integration of mobility analysis with housing choice analysis in this paper a longitudinal discrete choice model of the choice of housing tenure and size is presented and estimated using panel data this conditional fixed effects multinomial logit model developed by g chamberlain is computationally convenient and successfully accounts for time invariant differences among households while household specific unobserved characteristics can be readily accounted for in a linear model this is not the case for a quantitative choice model the use of a model of the type employed here thus provides a crucial link between time series analysis and a discrete choice setting estimation of this model yields results with respect to age and price that differ from results obtained from individual and pooled cross sections this provides support for the plausible proposition that housing choices are intertemporally correlated and more importantly emphasizes the importance of accounting for this correlation to estimate consistently the parameters of housing choice models

exports and economic growth in industrialized countries the prima facie causal relationships between growth exports and factor inputs capital and labour are investigated in five industrialized countries germany itlay japan united kingdom and united states over the period 1960 87 by analysing a four variable vector autoregressive var model for each country our results indicate that germany and japan experienced export led growth reverse causality between exports and growth is found in the case of the us and uk while to causal relationship between exports and output is found for itlay

the social and private micro level consequences of homeownership abstract this paper reviews the literature that describes the micro level economic and social consequences of homeownership we adopt an interdisciplinary approach and include studies from economics sociology geography political science psychology and other disciplines our focus is on the set of consequences of homeownership in developed countries our list of potential outcomes of homeownership includes the impact on household wealth and portfolio choice mobility labor force participation urban structure and segregation home maintenance political and social activities health demographics self esteem and child outcomes there is substantial evidence that homeownership has important effects on some household behaviors and outcomes however we find that much of the past 30 year s literature on consequences of homeowning is deficient from a theoretical or econometric perspective we suggest solutions and identify research gaps present in the literature

resource supplies and changing world agricultural comparative advantage abstract this paper advances consideration of the heckscher ohlin h o theory of comparative advantage to agriculture in a dynamic setting the dynamic relationship among trade flows resource supplies and factor contents is studied the view that special circumstances in the agricultural sector render the h o theory inapplicable as a guide to agricultural trade is challenged consistent with the h o theory the results suggest that changing world patterns of resource abundance are an important explanation of the evolving structure of world trade in agriculture commodities

market structure and u s trade flows abstract using samples of input output table detailed industries we test the impact of various elements of market structure on u s trade flows at the industry level holding factor proportions constant industry demand characteristics and the extent of scale economies have significant impacts on trade flows labor intensity at the industry level has the effects on trade flows which are predicted by the factor proportions theory capital intensity increases both import and export flows this result together with certain others suggests the importance of trade among industrialized countries in producer goods

a test of the heckscher ohlin vanek theorem the leontief commonplace abstract this paper provides a logically complete empirical test of the hov theorem for the united states by comparing measures of factor intensities trade and factor endowments under the appropriate computations of the factor contents of trade and production u s data are shown to diverge often from their values as predicted by hov as a result it appears that paradoxical outcomes may be common in empirical applications of the theorem

an interpretation of the factor content of trade abstract this paper shows that the factor content of trade can be used to indicate effects of trade on relative factor prices factor prices in two trading equilibria can be compared by comparing instead their two equivalent autarky equilibria constructed by changing factor endowments by the factor content of trade using relationships between autarky factor prices and factor endowments several relationships are derived between factor prices with trade and its factor content the most general result is a positive correlation between relative changes in the factor content of trade appropriately normalized and proportional changes in factor prices

science and technology in united states foreign trade economists generally believe that modern science technology such as the presence of scientists and engineers or research and development is a central factor in the comparative advantage of advanced industrial nations however most discussion of this topic rests on cross industry regressions which leamer and bowen i981 do not provide a valid indication of factor abundance so the overall role of science still remains to be established in addition much remains to be known about the role of different facets of science and innovation in the process of generating comparative advantage there are two fundamentally different ways of understanding technological differences between countries one point of view adopted in the standard neoclassical theory of international trade assumes all countries are on the same production function under these circumstances relative factor abundance determines the factor services which a country exports or imports within this perspective one can make progress towards an understanding of the role of science and technology in international trade by dividing science into many highly specific narrowly defined input factors calculations can then determine the relative abundance of those inputs associated with science technology versus other input factors in a given country or the relative abundance of different elements within the broad area of overall science technology quite another procedure assumes there are substantial differences in the production possibilities faced by different countries for example krugman i979 recently argued that advantages in innovation and lags in the diffusion of knowledge are the basic influences which permit incomes to be higher in the industrialised world than in developing nations this view illustrates the potential economic significance of innovation in advanced countries since the generation of new technologies in industrialised countries and their diffusion to the rest of the world then essentially determines world income distribution and world economic development however empirical implementation of the diffusion viewpoint requires data for many countries which greatly limits the number of facets of technology which can be considered since the present paper is centrally concerned with the effect which a wide variety of technological elements has on international trade we choose to select a framework within which the ample data available on different aspects of technology in the united states can be utilised the first view of technological

relative export competitiveness of agricultural commodities and its determinants some evidence from india abstract in this paper we derive time varying relative export competitiveness rec of india s top agricultural exports rice wheat cotton and sugar against india s share of world agricultural exports rec wa and world exports rec we from 1961 to 2012 we reveal that india s exports of all four commodities became relatively competitive over time but these were not as competitive as the top or selected emerging exporters of the four commodities we also examine the determinants of rec in these four commodities focusing on factors including crop specific and aggregate factor endowments domestic price export prices and gdp per capital preferential trade agreements export restrictions and bans and india s green revolution the regression analysis was mainly confined to the 1981 2012 due to data constraints we find that the time series regression results are similar in sign and significance for rec we and rec wa our key findings suggest the rec in wheat rice and cotton deteriorated as a result of export restrictions capital had negative effects on cotton rec labor and farm size did not influence the rec in the commodities the green revolution improved the rec in rice and cotton in phase 3 the wto had a positive effect on the rec in rice the south asian free trade area safta agreement adversely affected the rec in wheat and rice but strengthened the rec in cotton and sugar higher domestic price reduced the rec in cotton higher per capita income strengthens the rec in wheat with a lag we explain these results and suggest policy implications

r d rivalry industrial policy and u s japanese trade the authors examine how the strategic aspect of japanese research and development expenditures and industrial policies affected u s japanese bilateral trade during the late 1970s and investigate which component of r d expenditures on process innovation product quality improvements new products and new technology or technology transfer proved to be most effective they find that while japanese r d expenditures have generally promoted japan s trade advantage certain components of r d have proved more effective than other the depreciation subsidy and special status with the ministry of international trade and industry is positively related to the japanese trade performance while legal cartelization status has not had any apparent effect copyright 1988 by mit press

commodity trade and relative returns to factors of production in this paper a model that can be used to estimate relative factor price differences between pairs of countries is developed estimation requires observations of actual bilateral commodity trade flows and knowledge of input requirements for commodity production the linchpin here is the set of relative production cost differences which on the one hand determine trade flows and which in turn are a function of production requirements and relative factor returns the model is implemented to estimate relative factor returns between the united states and each of eight other countries several useful applications of the model are suggested

an evaluation of factor endowments and protection as determinants of japanese and american foreign trade we consider the relationship between the factor content of japanese and american foreign trade and examine empirically whether discrepancies between the heckscher ohlin theoretical predictions and the observed patterns of trade can be attributed to protection the michigan model of world production and trade is used for computational purposes we find some evidence of discrepancies between predicted and observed trade patterns but removal of protection either worsens these discrepancies or reduces them by only a small amount some possible reasons for the empirical shortcomings of the heckscher ohlin theory are offered in conclusion

free trade fair trade strategic trade and protectionism in the u s congress 1987 88 what conditions led the one hundredth congress of the united states to enact fair trade and strategic trade policies into law during 1987 88 political partisanship is an important force with democrats supporting and republicans opposing all types of trade intervention otherwise the coalitions of support for and opposition to the various trade policies differ particularly in the senate in that body international business is associated with support for fair trade policies and with opposition to classical protectionism while domestic u s business is associated with support for classical protectionism liberalism is strongly associated with support for fair and strategic trade policies but is not associated with classical protectionism in the house of representatives the long standing protectionist coalition remains an influence few forces in support of free trade remain in u s politics changing international market conditions rapidly affect the making of u s trade policy

globalization outsourcing and wage inequality there is considerable debate over whether international trade has contributed to the declining economic fortunes of less skilled workers one issue that has become lost in the current discussion is how firms respond to import competition and how these responses in turn are transmitted to the labor market in previous work we have argued that outsourcing by which we mean the import of intermediate inputs by domestic firms has contributed to an increase in the relative demand for skilled labor in the united states if firms respond to import competition from low wage countries by moving non skill intensive activities abroad then trade will shift employment towards skilled workers within industries in this paper we extend our previous work by combining new import data from the revised nber trade database with disaggregated data on input purchases from the census of manufactures we construct industry by industry estimates of outsourcing for the period 1972 1990 and reexamine whether outsourcing has contributed to an increase in relative demand for skilled labor our main finding is that outsourcing can account for 31 51 of the increase in the relative demand for skilled labor that occurred in u s manufacturing industries during the 1980s compared to our previous estimate of 15 33 this abstract was borrowed from another version of this item

determinants of the structure of swedish foreign trade in manufactures 1968 1979 swedish net exports of manufactured goods are analyzed empirically for the years 1968 1970 1977 and 1979 in a neo heckscher ohlin framework where technological effects are taken into account the analysis is repeated for bilateral exchange with other industrial countries lessdeveloped countries and socialist countries there is some evidence that swedish net exports of manufactures to a growing extent embody direct services of human capital especially vis avis the ldcs and socialist countries a positive relationship between direct inputs of physical capital and net trade such as was found for 1957 is no longer evident i introduction the direct factor content of swedish foreign trade in manufactures is analyzed in this paper using a modified neo heckscher ohlin model in combination with some technological factors assumed to influence the structure of foreign trade the presumption that human capital is an important determinant of sweden s comparative advantage is confronted with data previous results dating back to 1957 concerning the role of physical capital are also followed up during the last decade the change in the driving forces of international trade as evidenced by restructuring problems in many industrialized countries sweden is no exception has attracted a great deal of attention at the same time a number of studies have appeared in which the export performance of notably the u s and west germany has been analyzed

offshore sourcing reaction maturation and consolidation of u s multinationals the authors conducted a quasi longitudinal investigation of u s multinationals r d manufacturing offshore sourcing strategies and resultant global market performance implications utilizing comprehensive data collected by the 1977 1982 and 1989 benchmark surveys of u s direct investment abroad hypotheses were tested in a path analytic framework despite increased competition at home and abroad causing their global market share positions to weaken in recent years u s multinationals have maintained and even may have improved their global consolidated profitability levels by skillfully exploiting their technological prowess through technology transfer and off shore sourcing rapidly changing roles of u s parent firms and their foreign affiliates in technology development and global sourcing relationships portend a maturing yet arduous shift toward a global rationalization

a symmetric normalized quadratic gnp function and the u s demand for imports and supply of exports this paper reports estimates of a gnp function for the united states using data covering most of the postwar period and it introduces a new functional form the symmetric normalized quadratic variable profit function which is a natural extension of recent work by diewert and wales this functional form allows convexity in prices and concavity in fixed inputs to be imposed globally empirical results indicate that the demand for imports is less price elastic than the supply exports that an increase in labor endowment favors trade and that a deterioration of the terms of trade mostly hurts labor

the impact of technological innovation on international trade patterns the evidence reconsidered abstract this paper presents some new evidence in relation to the role of technical change in particular industrial innovation on the international competitiveness of the various oecd countries its originality consists primarily of a using a technology output indicator to measure technological performance b presenting and comparing various measures of trade and technological performance for each individual oecd country with the exception of iceland c analysing at a relatively high level of product industry disaggregation the relationship between export performance and technological performance at the same time the very limited scope of the paper has to be emphasized a the analysis is purely static all the evidence presented relates to one year 1977 b most of the results obtained are preliminary and should be further substantiated by more detailed empirical and theoretical research c as a consequence little attention has been paid to policy implications which it was felt could only be discussed properly in a later stage the paper consists of four sections a brief review of the state of the art section 1 a discussion on definitions of technology intensity section 2 the development of the best technology output indicator section 3 and the empirical analysis itself section 4 the following most important results emerge from these various sections a there are serious shortcomings in using average technology intensity as bench mark for classifying products or industries in technology intensive or nontechnology intensive categories b there is a substantial difference between technology intensity as measured on the basis of a technology input proxy rd c yet as between countries the most traditional output and input indicators the number of patents granted and the amount spent on rd d foreign patenting in particular foreign patenting in the united states figs 1 and 2 section 3 is a more reliable technology output proxy than domestic patenting e in terms of technological comparative advantage as opposed to technology intensity it is the small oecd countries as opposed to the large ones which seem to base their trade comparative advantage on technological comparative performance table 7 section 4 1 f at the individual industry level it is found that i for most technology intensive industries defined however in a less restrictive way than us r d intensities a close relation exists between technological performance and export performance and ii that as compared to other country specific resource variables technological performance is the most important trade explanatory variable its elasticity increasing with the technology intensity of industries tables 11 and 12 section 4 2 space constraints prevented us from presenting the data in relation to the inter industry and inter country analysis these can however be obtained from the author

technology trade and factor prices abstract the view that recent changes in the distribution of income primarily reflect technology rather than trade may be the majority opinion but has been harshly criticized by some trade economists this paper will argue that the critique in fact misses the point essentially because the critics undertake the wrong thought experiments trade volumes are not irrelevant if one poses the question correctly one immediately realizes that small trade volumes are inconsistent with a story that attributes large distributional effects to trade the factor bias of technological change is not immaterial except in the case where such change takes place in a small open economy as opposed to one that can affect world prices and where technical change occurs only in that economy rather than occurring simultaneously in other economies as well since the real situation does not meet either criterion factor bias definitely does matter most surprisingly the much maligned use of a factor content approach to infer the effects of trade on factor prices turns out to be an entirely justified procedure when carefully applied

factor prices and the factor content of trade revisited what s the use abstract this paper examines and extends a result of deardorff and staiger an interpretation of the factor content of trade journal of international economics 1988 24 93 107 d s who showed how the factor content of trade may indicate the factor price adjustments that can be attributed to that trade it elaborates on what this means and also extends it beyond several of the assumptions that d s used the strongest result in d s only for cobb douglas technology is extended to common constant elasticities of substitution and for small changes more general technologies also the assumption of nonspecialization is shown to be unnecessary with cobb douglas technology more generally noncompeting imports equate with hicks neutral technological improvements