Testing the Ricardian trade theory

Martin Kukuk

No 113, Discussion Papers, Series II from University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy"

Abstract: The simple Ricardian model explains the comparative cost advantage by a relative productivity advantage of the single factor of production. This model is tested in this paper using microdata of the german business survey. In a first approach labour is being considered to be the only factor of production whereas in a second one capital is analysed. The results show that the former is able to explain the pattern of trade whereas the latter has no explanatory power. Therefore, labour productivity is a decisive determinant as to whether a commodity will be exported or not.

Date: 1990
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