DOES ECONOMIC GEOGRAPHY MATTER FOR INTERNATIONAL SPECIALIZATION?

Donald Davis and David Weinstein

No 294411, Harvard Institute for International Development (HIID) Papers from Harvard University, Kennedy School of Government

Abstract: L_There are two principal theories of why countries trade: comparative advantage and increasing returns to scale. Yet there is no empirical work that assesses the relative importance of these two theories in accounting for production structure and trade. We use a framework that nests an increasing returns model of economic geography featuring "home market" effects with that of Heckscher-Ohlin. We employ these trade models to account for the structure of OECD manufacturing production. The data militate against the economic geography framework. Relatively few sectors match its theoretical predictions. Moreover, of the explainable variation in production patterns, endowments account for 90 per cent, economic geography but 5 per cent.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Pages: 75
Date: 1997-07
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Citations: View citations in EconPapers (9)

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https://ageconsearch.umn.edu/record/294411/files/harvard044.pdf (application/pdf)

Related works:
Working Paper: Does Economic Geography Matter for International Specialization? (1997)
Working Paper: Does Economic Geography Matter for International Specialization? (1997)
Working Paper: Does Economic Geography Matter for International Specialization? (1996)
Working Paper: Does Economic Geography Matter for International Specialization? (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:hariid:294411

DOI: 10.22004/ag.econ.294411

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