TY  - JOUR
AU  - Davis,Donald R.
AU  - Weinstein,David E.
TI  - Does Economic Geography Matter for International Specialization?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5706
PY  - 1996
Y2  - August 1996
UR  - http://www.nber.org/papers/w5706
L1  - http://www.nber.org/papers/w5706.pdf
N1  - Author contact info:
Donald R. Davis
Department of Economics
Columbia University
1004 International 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
AB  - There are two principal theories of why countries trade: comparative advantage and increasing returns to scale.  Yet there is no empirical work that assesses the relative importance of these two theories in accounting for production structure and trade.  We use a framework that nests an increasing returns model of economic geography featuring home market  effects with that of Heckscher-Ohlin-Vanek.  We employ these trade models to account for the structure of OECD manufacturing production.  The data militate against the economic geography framework. Moreover, even in the specification most generous to economic geography, endowments account for 90 percent of the explainable variance, economic geography but 10 percent.
ER  -