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The Development and Testing of Heckscher-Ohlin Trade ModelsA Review$
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Robert E. Baldwin

Print publication date: 2008

Print ISBN-13: 9780262026567

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262026567.001.0001

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Early Empirical Tests of the Heckscher-Ohlin Proposition

Early Empirical Tests of the Heckscher-Ohlin Proposition

Chapter:
(p.61) 3 Early Empirical Tests of the Heckscher-Ohlin Proposition
Source:
The Development and Testing of Heckscher-Ohlin Trade Models
Author(s):

Robert E. Baldwin

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262026567.003.0032

This chapter focuses on attempts to find statistical support for the Heckscher–Ohlin proposition. The results from early tests were disappointing. The most famous of these tests, namely Leontief’s (1953) analysis of US trade for 1947, produced the paradoxical result for a country generally regarded as being capital abundant, that the capital/labor ratio of a representative bundle of its exports was less than the capital/labor ratio of a representative bundle of its imports. Although Leamer (1980) demonstrated that Leontief’s paradoxical result was reversed when the US trade balance for 1947 was appropriately adjusted, Leamer’s reversal of the Leontief paradox failed to hold for other years in the 1950s, 1960s, and 1970s when the US trade balance was adjusted in the manner he specified.

Keywords:   Wassily Leontief, factor-content tests, Leontief paradox, Heckscher–Ohlin proposition, trade balance, Leamer

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