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Factor Content of Agricultural Trade

d'Artis Kancs and Pavel Ciaian

No EERI_RP_2008_05, EERI Research Paper Series from Economics and Econometrics Research Institute (EERI), Brussels

Abstract: In this paper we study factor content of the CEE agricultural trade. In order to account for differences in technology and factor prices in CEE, the theoretical framework of the present study builds on the previous work of Helpman (1984) and Staiger (1986) who consider a trade equilibrium in which factor prices are allowed to differ across countries and Lai and Zhu (2007), who account for international technology differences. In the empirical analysis we examine three hypothesis, which relate cross-country differences in technology, relative factor abundance and transaction costs and market imperfections to the factor content of trade. We find that the first two hypotheses are confirmed by the majority of developed countries, but rejected by roughly one half of the CEE transition country pairs. We find that, when accounting for transaction costs of farm (re)organisation, both hypotheses are confirmed by the majority of CEE country pairs. These findings provide empirical evidence of market imperfections, and particularly, of transaction costs of farm (re)organisation.

Keywords: Factor content; bilateral trade; relative factor abundance; technological differences; agriculture; transaction costs. (search for similar items in EconPapers)
JEL-codes: F12 F14 D23 Q12 Q17 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr and nep-int
Date: 2008-04
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Related works:
Journal Article: Factor content of bilateral trade: the role of firm heterogeneity and transaction costs (2010) Downloads
Working Paper: Factor Content of Agricultural Trade: The Role of Firm Heterogeneity and Transaction Costs (2009) Downloads
Working Paper: Factor Content of Bilateral Trade: The Role of Firm Heterogeneity and Transaction Costs (2009) Downloads
Working Paper: Factor Content of Agricultural Trade (2008) Downloads
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