 Factor proportions and the growth of world tradeJournal of International Economics, 2015, vol. 95, issue 1, 42-53 Abstract: Most of the expansion of global trade since 1980 has been of the North–South kind — between capital-abundant developed and labour-abundant developing countries. Based on this observation, I argue that the recent growth of world trade is best understood from a factor-proportions perspective. Using data on trade barriers and estimates of capital–labour ratios for a group of 45 economies between 1980 and 2008, I find that a calibrated factor-proportions model can generate significant trade growth during this period, amounting to 90% of the observed rise in North–South trade. The opening up of China alone accounts for three quarters of the predicted increase. In line with the model, I present evidence that China's liberalisation has raised the exports and imports of capital-abundant countries relative to more labour-abundant economies. Overall, my findings suggest that factor-proportions theory may be useful for interpreting several quantitative and qualitative aspects of growing world trade in a period during which the group of large, open economies has become significantly less homogenous. Keywords: Heckscher–Ohlin; International trade; China (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:95:y:2015:i:1:p:42-53 DOI: 10.1016/j.jinteco.2014.10.004 Access Statistics for this article Journal of International Economics is currently edited by Martin Uribe and Costas Arkolakis More articles in Journal of International Economics from Elsevier |
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