The Armington-Heckscher-Ohlin model - an intuitive exposition

Patrick Jomini, Xiao-guang Zhang and Michelle Osborne

No 331900, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: Global models of world trade are often used as input into assessing the possible effects of liberalising trade. As simplifications of the economic processes – and the counterfactuals that they are designed to explain – they include many assumptions on which their results depend. Some of the crucial assumptions in global models of world trade include how – and which – gains from trade are captured. One of the main features of global models is the Armington assumption which differentiates products according to their geographic origin and gives rise to certain types of gains from trade. Although some trade is differentiated, trade in homogenous products exists and is responsible for other types of gains from trade. The purpose of this paper is to provide an intuitive explanation for a modification of the standard Armington specification of trade models, to represent gains from trade in differentiated and homogenous products. This modification relies on the identification of on-way trade flows in homogenous products in databases that typically include only twoway trade flows. Illustrative experiments with a 25-country GTAP aggregation indicate that the A-H-O specification can quadruple the estimated effects of reducing tariffs globally in manufacturing.

Keywords: International Relations/Trade; Research Methods/Statistical Methods (search for similar items in EconPapers)
Pages: 24
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/331900/files/4443.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:331900

Access Statistics for this paper

More papers in Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().