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Title:Testing the general validity of the Heckscher-Ohlin theorem: The natural experiment of Japan PDF Logo
Authors:Bernhofen, Daniel M.
Brown, John C.
Issue Date:2011
Series/Report no.:CESifo working paper: Empirical and Theoretical Methods 3586
Abstract:We exploit Japan's 19th century move from autarky to free trade to provide the first test of the general validity of the price formulation of the Heckscher-Ohlin theorem. In this formulation a country's autarky factor price vector imposes a single refutable prediction on the economy's factor content of trade. Our test combines factor price data from Japan's late autarky period with Japan's factor content of trade calculated with the technologies of the country of origin of traded goods. The direct and indirect input requirements are constructed from many historical sources, including a major Japanese survey of agricultural techniques and a rich set of 19th century comparative cost studies. Evaluating Japan's factor content of trade during 1865-1876 at autarky factor prices, we fail to reject the Heckscher-Ohlin hypothesis in each sample year.
Subjects:testing the price version of Heckscher-Ohlin
the natural experiment of Japan
JEL:F11
F14
N10
N75
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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