A Century of Missing Trade?

Antoni Estevadeordal and Alan Taylor

No 8301, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In contemporary data, the measured factor content of trade is far smaller than its predicted magnitude in the pure Heckscher-Ohlin-Vanek framework, the so-called 'missing trade' mystery. We wonder if this problem has been there from the beginning: that is, we ask if the Heckscher-Ohlin theory was so much at odds with reality at its time of conception. We apply contemporary tests to historical data, focusing on the major trading zone that inspired the factor abundance theory, the Old and New Worlds of the pre-1914 'Greater Atlantic' economy. This places our analysis in a very different context than contemporary studies: an era with lower trade barriers, higher transport costs, a more skewed global distribution of the relevant factors (especially land), and comparably large productivity divergence. These conditions might seem more favorable to the theory, but the results are still very poor.

JEL-codes: F11 F2 (search for similar items in EconPapers)
Date: 2001-05
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published as Estevadeordal, Antoni and Alan M. Taylor. "A Century Of Missing Trade?," American Economic Review, 2002, v92(1,Mar), 383-393.

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