Does Skill Content Explain Total Trade and Intra-Industry Trade?

This study compares the results of skill content tests for types of trade flows under alternative assumptions about the technologies used to produce imports and exports. For trade between high‐ and middle‐income countries, we show that the match between the actual skill content of trade and that pre...

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Bibliographic Details
Published inOxford bulletin of economics and statistics Vol. 71; no. 5; pp. 601 - 619
Main Authors Cabral, Manuel, Falvey, Rod, Milner, Chris
Format Journal Article
LanguageEnglish
Published Oxford, UK Blackwell Publishing Ltd 01.10.2009
Department of Economics, University of Oxford
SeriesOxford Bulletin of Economics and Statistics
Subjects
Comparative analysis
Exports
F11
F14
Heckscher-Ohlin theorem
Imports
Interindustry economics
International trade
Skills
Studies
Technology transfer
Trade flows
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Summary:This study compares the results of skill content tests for types of trade flows under alternative assumptions about the technologies used to produce imports and exports. For trade between high‐ and middle‐income countries, we show that the match between the actual skill content of trade and that predicted by endowments in a Heckscher–Ohlin–Vanek framework improves substantially if technological heterogeneity across countries is allowed for and if the factor content of intra‐industry trade is included with that of inter‐industry trade. Endowment differences are important in explaining net trade and vertical intra‐industry trade, but not horizontal intra‐industry trade.
Bibliography:ArticleID:OBES555
ark:/67375/WNG-PMM2H6K6-X
The authors thank Jon Temple and a referee for comments. Falvey and Milner gratefully acknowledge financial support from the Leverhulme Trust under programme grant F/00 114/AM.
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ISSN:0305-9049
1468-0084
DOI:10.1111/j.1468-0084.2009.00555.x