Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/198572
Authors: 
Sorg-Langhans, George
Struck, Clemens
Velic, Adnan
Year of Publication: 
2018
Series/Report no.: 
UCD Centre for Economic Research Working Paper Series No. WP18/19
Abstract: 
Theories of international trade have severe difficulties in explaining why, despite i) substantial differences in factor-proportions across industries and ii) considerable cross-country differences in capital-labor ratios, the iii) the evidence for factor-proportions trade is rather weak. We propose a simple explanation of this well known finding: standard trade theories treat important forces such as the distribution of productivity within the economy as exogenous. We argue instead that the productivity allocation is endogenous and counter-balances factor-proportion differentials be- tween countries. Consequently, comparative advantage across countries of different development levels is negligible and this is why the incentives for trade are low.
Subjects: 
factor-proportions trade
Heckscher-Ohlin-Vanek
macroeconomic general equilibrium mo- dels
endogenous growth
biased productivity
JEL: 
F11
F14
F41
O47
Document Type: 
Working Paper

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