In spite of Latin America’s dismal economic performance between the 1950s and 1980s, the region experienced strong capital deepening. Furthermore, productivity (measured as TFP) grew at low rates in comparison with the U.S. In this paper, we suggest that all these facts can be explained as a consequence of the restrictive trade regime adopted at that time. Our analytical framework is based on a...

This paper revisits the role of skill distributions in trade using a variant of the Heckscher-Ohlin model with multidimensional skill endowment and specialized production organized in teams. The equilibrium is characterized by the “effective endowment”, the part of endowment that is actually utilized in production, which depends on the team matches and the task specialization within teams. It i...

This paper empirically investigates the effect of product cycle on comparative advantage for countries with different knowledge capital endowment. Product cycle is the exogenous nature of technology evolution in each industry. Longer product cycle means new discovery takes longer time to arise. Meanwhile the imitation of existing innovation is easier in industries with longer product cycles. St...

I In 1961 Burenstam Linder (1961) rocked the boat of the prevailing Heckscher-Ohlin trade theory by noting that much of international trade, particularly in manufactures, was among similar countries, not between countries with disparate factor endowments (as between rich and poor countries). His explanation was in terms of demand, more trade taking place among relatively rich countries with sim...

This paper analyzes whether and to what extent determinants of comparative advantage have explanatory power for conventional services trade. It assesses the geographical, Heckscher-Ohlin and institutional determinants of services trade based on the literature for goods trade. Moreover, this paper investigates the importance of a country’s governance of regulation as a source of comparative adva...

This paper incorporates Northern product innovation and product-cycle-driven technology transfer into the continuum-of-goods Heckscher-Ohlin model. The creation of very skill-intensive goods induces the North to transfer production of older, less skill-intensive goods to the South. These relocated goods must be the most skill intensive by Southern standards. Thus, product cycles raise the relat...

Factor price equality across countries is an important implication of the Heckscher-Ohlin-Samuelson model of international trade. Although an influential theoretical result, the model has received surprisingly little empirical support. Burgman and Geppert (1993) argue that this might be due to the neglect of the nonstationarity property of the time series under consideration. Using a cointegrat...

Feldstein and Horioka (Econ J 90:314–329, 1980) observed that saving and investment move closely together in the major OECD countries. This finding is a puzzle if national economies are characterized by one sector neoclassical production functions—with diminishing returns to capital, a high level of savings in a country should create an incentive to export capital. In this paper, we show that t...

This paper focuses on three unresolved issues with regard to the impact of trade reform. First, many studies linking trade reform to long run growth are surprisingly fragile. To illustrate the problems with this literature, we examine a popular measure of openness w recently introduced by Sachs and Warner Sachs, J., Warner, A., 1995. Economic reform and the process of global integration. Brooki...

Utilizing simulation approach, this paper examines if the income distribution inequality of a country expands through globalization and/or innovation, somewhat modifying the traditional Heckscher–Ohlin model. First, independently of innovation, the globalization is examined for a country A with two industries (commodities) and four consumers: the (aggregate) worker, the (aggregate) capitalist, ...