International Specialization and the Return to Capital, 1976-2000

Catia Batista and Jacques Potin (potin@essec.fr)
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Jacques Potin: ESSEC Business School, Postal: Avenue Bernard Hirsch - B.P. 50105, 95021 CERGY-PONTOISE Cedex , FRANCE,, http://www.essec.edu

No DR 08001, ESSEC Working Papers from ESSEC Research Center, ESSEC Business School

Abstract: Using panel data, we provide an integrated treatment of factor endowments, factor prices, and international specialization. In the various cross sections, we confirm the Heckscher-Ohlin prediction that, with sufficient differences in country endowments, there is no factor Price equalization and countries specialize in different subsets of goods. We also explain why, despite higher returns to capital, poor countries do not attract more capital from rich countries. Moreover, along their development path, countries experience the structural change predicted by theory. We find that these changes in specialization mainly occur within industries. Despite capital accumulation by most countries, we find no decrease in the return to capital at any given capital-labour ratio. This must have facilitated growth through capital accumulation

Keywords: Economic Growth and International Trade; Heckscher-Ohlin; Multiple Cones; Marginal Product of Capital; Specialization (search for similar items in EconPapers)
JEL-codes: F11 F14 O40 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2008-01
New Economics Papers: this item is included in nep-dev and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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