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The Heckscher-Ohlin-Vanek Theorem and International Factor Price Differences

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  • Avik Chakrabarti

Abstract

This paper demonstrates the importance of accounting for absorption of inputs in a model of factor-augmenting international productivity differences when examining the consistency of international factor price differences with the Heckscher-Ohlin-Vanek (HOV) theorem. It is shown that the absence of such accounting has non-trivial implications in the form of introducing a bias in the calculation of productivity parameters based on the HOV theorem. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • Avik Chakrabarti, 2005. "The Heckscher-Ohlin-Vanek Theorem and International Factor Price Differences," Open Economies Review, Springer, vol. 16(4), pages 407-412, October.
    • Handle: RePEc:kap:openec:v:16:y:2005:i:4:p:407-412
    DOI: 10.1007/s11079-005-4737-1
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    References listed on IDEAS

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    1. 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 421-446, June.
    2. Marjit, Sugata & Beladi, Hamid, 1996. "Protection and the gainful effects of foreign capital," Economics Letters, Elsevier, vol. 53(3), pages 311-316, December.
    3. Marjit, Sugata, 1990. "A simple production model in trade and its applications," Economics Letters, Elsevier, vol. 32(3), pages 257-260, March.
    4. Trefler, Daniel, 1993. "International Factor Price Differences: Leontief Was Right!," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 961-987, December.
    5. repec:bla:econom:v:54:y:1987:i:214:p:173-84 is not listed on IDEAS
    6. Bowen, Harry P & Leamer, Edward E & Sveikauskas, Leo, 1987. "Multicountry, Multifactor Tests of the Factor Abundance Theory," American Economic Review, American Economic Association, vol. 77(5), pages 791-809, December.
    7. Daniel Trefler, 2002. "The Case of the Missing Trade and Other Mysteries: Reply," American Economic Review, American Economic Association, vol. 92(1), pages 405-410, March.
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    Cited by:

    1. Koebel, Bertrand M. & Levet, Anne-Laure & Nguyen-Van, Phu & Purohoo, Indradev & Guinard, Ludovic, 2016. "Productivity, resource endowment and trade performance of the wood product sector," Journal of Forest Economics, Elsevier, vol. 22(C), pages 24-35.

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