Comparative advantages in the digital era–A Heckscher-Ohlin-Vanek approach

Roman Stöllinger and Dario Guarascio

International Economics, 2023, vol. 175, issue C, 63-89

Abstract: This paper revisits the Heckscher-Ohlin-Vanek (HOV) theorem and investigates its fit for digital tasks and ICT capital, which both represent endowment factors that are expected to shape the digital transformation. We use a theory-consistent methodology for calculating the measured net factor content of trade and apply it to a unique dataset on digital and non-digital tasks performed in detailed occupations, as well as recent data on ICT capital stocks. Equipped with these data, we provide new evidence on the factor-based trade patterns for 25 EU countries and use it to test the HOV theorem. Overall, the performance of the sign test and the rank test is good, if not impressive. In 83% of the cases, countries are net exporters of those factors with which they are abundantly endowed, with a higher score achieved for digital tasks than for ICT capital. The relevance of digital tasks and ICT capital is corroborated by a gravity model, which indicates that higher endowments with these factors foster bilateral exports.

Keywords: Heckscher-ohlin-vanek theorem; Factor content of trade; Comparative advantage; Digital tasks; ICT capital (search for similar items in EconPapers)
JEL-codes: D57 F11 F14 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Comparative Advantages in the Digital Era: A Heckscher-Ohlin-Vanek Approach (2022)
Working Paper: Comparative Advantages in the Digital Era – A Heckscher-Ohlin-Vanek Approach (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inteco:v:175:y:2023:i:c:p:63-89

DOI: 10.1016/j.inteco.2023.05.002

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