We show a range of complexity results for the Ricardo and Heckscher-Ohlin models of international trade (as Arrow-Debreu production markets). For both models, we show three types of results: 1. When utility functions are Leontief and production functions are linear, it is NP-hard to decide if a market has an equilibrium. 2. When utility functions and production functions are linear, equilibria ...

Traditional neoclassical models of comparative advantage suggest that, all else equal, a country with idiosyncratically strong demand for a good will be an importer of that good. However, there is a contrary tradition that emphasizes the advantages of a large home market as a foundation for exports of a good. One recent formalization of this home market approach falls within what is termed the ...

Why is investment in human and physical capital in Latin America lower than in the faster growing economies of East Asia? Is this phenomenon and Latin America’s generally higher income inequality an important consequence of the input requirements and price variability of the regions’ products. To help answer these questions, this paper explores a Heckscher-Ohlin linear program incorporating rea...

the concept of virtual water trade refers to transact of the water consumed for production of goods and agricultural products through international trade. the anthony allan introduced this concept to improve global water used efficiency. in this paper, the original theory of allen has been investigated through incorporating virtual water as a factor of production in heckscher-ohlin internationa...

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...

We study the production side of the Heckscher–Ohlin model empirically. The evidence we present suggests that the endowments of countries around the world are too dissimilar for all countries to be able to produce the same set of goods. In contrast, the endowments of the rich OECD countries are sufficiently similar, so that these countries do not have to specialize in different subsets of goods....

Do rich and poor countries export the same goods to the US? Using highly disaggregate trade flow data – which breaks US imports into thousands rather than tens of goods – this paper documents two significant trends. First, the number of US imports originating in either rich or poor countries exclusively has fallen dramatically as the world has globalized, from 50% in 1972 to 25% in 1994. This g...

There are two principal theories of why countries or regions trade: comparative advantage and increasing returns to scale. Yet there is virtually 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 o...

It is hard to believe that factor endowments theory could offer an adequate explanation of international trade patterns. While the theory adequately predicts Saudi Arabian oil exports, it hardly seems appropriate for explaining the revolutionary impact of new technologies on world trade. Yet to take this position is to misunderstand the thrust of recent empirical research in international trade...