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International Trade in Manufactured Products: A Ricardo-Heckscher-Ohlin Explanation with Monopolistic Competition

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  • Ehsan U. Choudhri
  • Ms. Dalia S Hakura

Abstract

A large data set on trade in manufactured products is used to evaluate the performance of a model that combines both the Ricardian and Heckscher-Ohlin effects and incorporates monopolistic competition. The paper estimates a relation implied by the model to explain relative sectoral exports of major countries to a number of important markets, using 1970-90 data for nine manufacturing sectors. The relation fits the data well and variables suggested by both traditional and new trade models play an important role in explaining relative exports.

Suggested Citation

  • Ehsan U. Choudhri & Ms. Dalia S Hakura, 2001. "International Trade in Manufactured Products: A Ricardo-Heckscher-Ohlin Explanation with Monopolistic Competition," IMF Working Papers 2001/041, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2001/041
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    References listed on IDEAS

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    1. Ehsan U. Choudhri & Lawrence L. Schembri, 1999. "Productivity Performance and International Competitiveness: A New Test of an Old Theory," Carleton Economic Papers 99-02, Carleton University, Department of Economics, revised May 2002.
    2. Harrigan, James, 1997. "Technology, Factor Supplies, and International Specialization: Estimating the Neoclassical Model," American Economic Review, American Economic Association, vol. 87(4), pages 475-494, September.
    3. Leamer, Edward E, 1980. "The Leontief Paradox, Reconsidered," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 495-503, June.
    4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    5. Donald R. Davis & David E. Weinstein, 2001. "An Account of Global Factor Trade," American Economic Review, American Economic Association, vol. 91(5), pages 1423-1453, December.
    6. Caballero, Ricardo J. & Lyons, Richard K., 1990. "Internal versus external economies in European industry," European Economic Review, Elsevier, vol. 34(4), pages 805-826, June.
    7. Ms. Dalia S Hakura, 1999. "A Test of the General Validity of the Heckscher-Ohlin Theorem for Trade in the European Community," IMF Working Papers 1999/070, International Monetary Fund.
    8. Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, vol. 85(5), pages 1029-1046, December.
    9. Deardorff, Alan V., 1984. "Testing trade theories and predicting trade flows," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 10, pages 467-517, Elsevier.
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    Cited by:

    1. Mohammadi Khyareh , Mohsen, 2017. "Asymmetric Effects of Exchange Rate Changes in Iran," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 12(3), pages 317-344, July.
    2. Gianfranco De Simone, 2008. "Trade in Parts and Components and the Industrial Geography of Central and Eastern European Countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(3), pages 428-457, October.
    3. Demmou Lilas, 2009. "Déterminants et nature des spécialisations Nord-Sud : quelques enseignements tirés de la littérature empirique," Revue d'économie politique, Dalloz, vol. 119(1), pages 71-94.
    4. Gianfranco DE SIMONE, 2007. "Trade in parts and components and Central Eastern European Countries’ industrial geography," Departmental Working Papers 2007-17, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    5. Dumont, Michel, 2004. "The Impact of International Trade with Newly Industrialised Countries on the Wages and Employment of Low-Skilled and High-Skilled Workers in the European Union," Thesis Commons bmxag, Center for Open Science.

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