 Specialization, Factor Accumulation and DevelopmentDoireann Fitzgerald and Juan Hallak No 488, Working Papers from Research Seminar in International Economics, University of Michigan Abstract: The Heckscher-Ohlin theory links specialization of production to relative factor endowments. Endowments are the result of accumulation in response to economic in-centives. Taking this into account allows us to reconcile wildly di¤erent predictions in the empirical literature about the e¤ect of capital accumulation on manufacturing output. We estimate the e¤ect of factor proportions on specialization in a cross-section of OECD countries. We show that using the estimation results alone, we cannot dis-tinguish between specialization driven by factor proportions, and specialization that is correlated with factor proportions for other reasons. But our results are consistent with evidence on sectoral factor intensities, which supports the H-O theory. Moreover, our model does a good job of predicting the substantial reallocation that takes place within manufacturing as countries grow. It explains 2/3 of the observed di¤erence in the pattern of specialization between the poorest and richest OECD countries. Pages: 48 Pages Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:mie:wpaper:488 Access Statistics for this paper More papers in Working Papers from Research Seminar in International Economics, University of Michigan Contact information at EDIRC. |
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