TY  - JOUR
AU  - Davis,Donald R.
AU  - Weinstein,David E.
AU  - Bradford,Scott C.
AU  - Shimpo,Kazushige
TI  - The Heckscher-Ohlin-Vanek Model of Trade: Why Does It Fail? When Does It Work?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5625
PY  - 1996
Y2  - June 1996
UR  - http://www.nber.org/papers/w5625
L1  - http://www.nber.org/papers/w5625.pdf
N1  - Author contact info:
Donald R. Davis
Columbia University, Department of Economics
1038 Intl. Affairs Building
420 West 118th St.
New York, NY 10027
Tel: 212/854-4037
Fax: 212/854-8059
E-Mail: drd28@columbia.edu

David Weinstein
Columbia University, Department of Economics
420 W. 118th Street
MC 3308
New York, NY  10027
Tel: 212/854-6880
Fax: 212/854-8059
E-Mail: dew35@columbia.edu

Kazushige Shimpo
Keio University
2-15-45 Mita
Minato-ku, Tokyo 108-8345
JAPAN
E-Mail: shimpo@fbc.keio.ac.jp
AB  - The Heckscher-Ohlin-Vanek model of factor service trade is a central construct in international economics.  Empirically, though, it is a flop.  This warrants a new approach.  Using Japanese regional data we are able to test the HOV model by independently examining its component production and consumption elements.  The strict HOV model performs poorly because it cannot explain the international location of production.  However, relaxing the assumption of universal factor price equalization yields a dramatic improvement.  We also solve most of what Trefler (1995) calls the mystery of the missing trade.   In sum, the HOV model performs remarkably well.
ER  -