Utilizing simulation approach, this paper examines if the income distribution inequality of a country expands through globalization and/or innovation, somewhat modifying the traditional Heckscher–Ohlin model. First, independently of innovation, the globalization is examined for a country A with two industries (commodities) and four consumers: the (aggregate) worker, the (aggregate) capitalist, ...

Existing research suggests that democracy fosters economic globalization by promoting trade liberalization in the developing world. We argue that democracy in developing countries generates a “skill bias” in trade protection where democratic incumbents have incentives to increase tariffs on high skilled goods but reduce trade barriers on low skilled goods. Our model analyzes how electoral compe...

An empirical tradition in international trade seeks to establish whether the predictions of factor abundance theory match with the data. The relation between factor endowments and trade in goods (commodity version of Hecksher-Ohlin) provide mildly encouraging empirical results. But in the analysis of factor service trade and factor endowments (factor content version of HO), the results show tha...

The effects of an intercountry transfer of purchasing power were first prominently discussed by Keynes (1929) and Ohlin (1929) in a debate concerning the secondary effects of such a transfer. In subsequent years several economists, including Pigou (1932), Metzler (1942), Samuelson (1952, 1954) and Johnson (1955), joined the debate. Throughout this debate, these writers all agreed that the trans...

I In 1961 Burenstam Linder (1961) rocked the boat of the prevailing Heckscher-Ohlin trade theory by noting that much of international trade, particularly in manufactures, was among similar countries, not between countries with disparate factor endowments (as between rich and poor countries). His explanation was in terms of demand, more trade taking place among relatively rich countries with sim...

This paper investigates international migrations patterns by skill and by region across the European Union during the period 1988-2005, which is characterised by substantial economic integration and further geographic enlargement. After presenting some facts about the regional distribution of skills of natives and foreigners, and their evolution over time, we develop a theoretical model where t...

This paper analyzes whether and to what extent determinants of comparative advantage have explanatory power for conventional services trade. It assesses the geographical, Heckscher-Ohlin and institutional determinants of services trade based on the literature for goods trade. Moreover, this paper investigates the importance of a country’s governance of regulation as a source of comparative adva...

North-South Trade Liberalization and Returns to Skill in the South: The Case of Mexico This study examines the effect of NAFTA, an instance of North-South trade liberalization, on returns to skill in Mexico. Mexico is abundant in low-skill workers relative to the US and Canada, and so, by the Hecksher-Ohlin-Samuelson trade model, NAFTA ought to have raised the relative earnings of low-skill wor...

This paper incorporates Northern product innovation and product-cycle-driven technology transfer into the continuum-of-goods Heckscher-Ohlin model. The creation of very skill-intensive goods induces the North to transfer production of older, less skill-intensive goods to the South. These relocated goods must be the most skill intensive by Southern standards. Thus, product cycles raise the relat...