TY  - JOUR
AU  - Harrigan,James
AU  - Zakrajsek,Egon
TI  - Factor Supplies and Specialization in the World Economy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7848
PY  - 2000
Y2  - August 2000
UR  - http://www.nber.org/papers/w7848
L1  - http://www.nber.org/papers/w7848.pdf
N1  - Author contact info:
James Harrigan
Department of Economics
University of Virginia
P.O. Box 400182
Charlottesville, VA 22904-4182
Tel: 434-243-8354
Fax: 434-982-2904
E-Mail: harrigan@nber.org

Egon Zakrajsek
Division of Monetary Affairs
Federal Reserve Board
20th Street & Constitution Avenue, NW
Washington, D.C. 20551
Tel: 202/728-5864
Fax: 202/452-2846
E-Mail: egon.zakrajsek@frb.gov
AB  - A core prediction of the Heckscher-Ohlin theory is that countries specialize in goods in which they have a comparative advantage, and that the source of comparative advantage is differences in relative factor supplies. To examine this theory, we use the most extensive dataset available and document the pattern of industrial specialization and factor endowment differences in a broad sample of rich and developing countries over a lengthy period (1970-92). Next, we develop an empirical model of specialization based on factor endowments, allowing for unmeasurable technological differences and estimate it using panel data techniques. In addition to estimating the effects of factor endowments, we also consider the alternative hypothesis that the level of aggregate productivity by itself can explain specialization. Our results clearly show the importance of factor endowments on specialization: relative endowments do matter.
ER  -