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Empirical Relevance of the Hillman Condition and Comparative Advantage

Author

Listed:
  • Jeroen Hinloopen

    (Faculty of Economics and Econometrics, Universiteit van Amsterdam)

  • Charles van Marrewijk

    (Faculty of Economics, Erasmus Universiteit Rotterdam)

Abstract

We analyze the empirical violation of the Hillman condition, a necessary and sufficient condition for the correspondence between comparative advantage and pre-trade relative prices. Our comprehensive data set allows us to investigate the Hillman condition for virtually all countries of the world, over an extended period of time, for many sectors, and for different levels of aggregation. Violations of the Hillman condition are small as a share of the number of observations, but can be substantial as a share of the value of world exports. Measured either way, violations occurred much more frequently in the 1970s and early 1980s, a difference mostly caused by the two oil crises. As the condition is useful for identifying various anomalies, we argue that it should be included as a standard diagnostic test for empirical studies into comparative advantage.

Suggested Citation

  • Jeroen Hinloopen & Charles van Marrewijk, 2004. "Empirical Relevance of the Hillman Condition and Comparative Advantage," Tinbergen Institute Discussion Papers 04-019/2, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20040019
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    References listed on IDEAS

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    1. repec:bla:reviec:v:8:y:2000:i:3:p:373-96 is not listed on IDEAS
    2. Proudman, James & Redding, Stephen J., 1998. "Persistence and Mobility in International Trade," CEPR Discussion Papers 1802, C.E.P.R. Discussion Papers.
    3. Jeroen Hinloopen & Charles Marrewijk, 2001. "On the empirical distribution of the Balassa index," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 137(1), pages 1-35, March.
    4. Imre Fertö & L. J. Hubbard, 2003. "Revealed Comparative Advantage and Competitiveness in Hungarian Agri–Food Sectors," The World Economy, Wiley Blackwell, vol. 26(2), pages 247-259, February.
    5. Jeroen Hinloopen & Charles van Marrewijk, 2004. "Dynamics of Chinese Comparative Advantage," Tinbergen Institute Discussion Papers 04-034/2, Tinbergen Institute.
    6. James Proudman & Stephen Redding, 2000. "Evolving Patterns of International Trade," Review of International Economics, Wiley Blackwell, vol. 8(3), pages 373-396, August.
    7. Arye Hillman, 1980. "Observations on the relation between “revealed comparative advantage” and comparative advantage as indicated by pre-trade relative prices," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 116(2), pages 315-321, June.
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    Cited by:

    1. Imre Fertő, 2008. "The evolution of agri-food trade patterns in Central European countries," Post-Communist Economies, Taylor & Francis Journals, vol. 20(1), pages 1-10.

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    More about this item

    Keywords

    Balassa index; Hillman condition; comparative advantage;
    All these keywords.

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F20 - International Economics - - International Factor Movements and International Business - - - General

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