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Testing the Ricardian trade theory

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  • Kukuk, Martin

Abstract

The simple Ricardian model explains the comparative cost advantage by a relative productivity advantage of the single factor of production. This model is tested in this paper using microdata of the german business survey. In a first approach labour is being considered to be the only factor of production whereas in a second one capital is analysed. The results show that the former is able to explain the pattern of trade whereas the latter has no explanatory power. Therefore, labour productivity is a decisive determinant as to whether a commodity will be exported or not.

Suggested Citation

  • Kukuk, Martin, 1990. "Testing the Ricardian trade theory," Discussion Papers, Series II 113, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    • Handle: RePEc:zbw:kondp2:113
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    References listed on IDEAS

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    1. Jagdish Bhagwati, 1969. "Trade, Tariffs, and Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262523590, December.
    2. Yatchew, Adonis & Griliches, Zvi, 1985. "Specification Error in Probit Models," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 134-139, February.
    3. 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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