One Size Fits All? Heckscher-Ohlin Specialization in Global Production
- (pp. 686-708)
AbstractThis paper introduces a new technique for testing the Heckscher-Ohlin model that allows for the possibility that countries with sufficiently disparate endowments specialize in unique subsets of goods. Results based upon industry-level data reject one-size-fits-all homogeneity in favor of Heckscher-Ohlin specialization. Results also reveal that industry-level data hide substantial intra-industry heterogeneity, violating the assumptions of the model and complicating the interpretation of results from earlier research. A methodology for adjusting industry output to reflect underlying product variation is introduced. Reestimation of the model using adjusted aggregates in place of standard industry classifications provides strong support for Heckscher-Ohlin specialization.
CitationSchott, Peter, K. 2003. "One Size Fits All? Heckscher-Ohlin Specialization in Global Production ." American Economic Review, 93 (3): 686-708. DOI: 10.1257/000282803322157043
- F11 Neoclassical Models of Trade
- F14 Empirical Studies of Trade
- O19 International Linkages to Development; Role of International Organizations