Specialization, fragmentation, and factor intensities: evidence from chilean plant-level data

Chul Chung and Alan Deardorff

Journal of Developing Areas, 2008, vol. 41, issue 2, 91-109

Abstract: We examine the effects of trade liberalization on structural changes at the plant-level and industry-level. The traditional Heckscher-Ohlin (H-O) model predicts an increase in capital-labor ratios in a labor abundant country after trade liberalization. This is in marked contrast to the implications of an otherwise similar model in which trade is the result of costly fragmentation, which predicts a declining pattern of capital-labor ratios following trade liberalization. Empirical results from Chilean plant-level data and industry-level data are rather consistent with fragmentation, which seems to require structural changes caused by trade liberalization.

Keywords: Fragmentation; Factor Intensity; Heckscher-Ohlin; Trade liberalization; Chile (search for similar items in EconPapers)
JEL-codes: F11 F14 O24 (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:jda:journl:vol.41:year:2008:issue2:pp:91-109

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