Motivated by the non-linear and S-shaped pattern between trade liberalization and capital inflow observed in cross country data, this paper offers a new perspective in understanding the relation between these two. The static model nests Melitz style heterogenous firms with endogenous mark-up within a classical Heckscher-Ohlin style comparative advantage frame work. In this integrated model trad...

The large volume of intra-industry trade is often cited as a critical element favoring trade theories based on increasing returns and imperfect competition over those with constant returns and perfect competition. The former provide an elegant account of intra-industry trade, while the latter, it is often argued, cannot. This paper provides an account of intra-industry trade based squarely on c...

World-wide cross-country regressions are used to examine South Asia’ s export structure through the lens of Heckscher± Ohlin trade theory. By comparison with other regions, South Asia’s exports are unusually concentrated on labour-intensive manufactures. This distinctive export structure is shown to be the result mainly of South Asia’s distinctive combination of resources: by comparison with ot...

The theoretical insights of Heckscher and Ohlin, Feenstra and Hanson, and Tang and Wood between them provide a plausible explanation of the varied effects of globalisation on wage inequalities in developed and developing countries. In combination, these three theories can explain, among other things, why inequality has fallen in some developing countries but risen in others. Improved travel and...

In the debate on globalisation and wage inequality HeckscherOhlin theory has featured prominently. However, a neglected mechanism by which globalisation affects labour market outcomes is through the increased tradability of producer services. By integrating elements of Heckscher-Ohlin theory, the economic geography literature and the literature on producer services linkages, we show that the im...

This paper focuses on the question of whether labour standards can affect comparative advantage in unskilled-labour-intensive goods, and thereby influence trade flows. Using a Heckscher-Ohlin framework, the effects of low labour standards depend on the type of standard: Forced and child labour lead to an increase in the endowment of unskilled labour, and hence improve comparative advantage in u...

The relationship between trade liberalisation and the environment has been the subject of a growing body of literature in recent years. As can be seen from the differing assessment of instrument types for environmental protection, one of the important factors for the relationship between environmental protection and economic competitiveness are regulatory stringency and efficiency. This concern...

Stages of Diversification in a Neoclassical World Recent research has documented a U-shaped industrial concentration curve over an economy’s development path. How far can neoclassical trade theory take us in explaining this pattern? We estimate the production side of the Heckscher-Ohlin model using industry data on 44 developed and developing countries for the period 1976-2000. Decomposing the ...

This paper presents a specific factor model of a small open economy to show the factor price effect and welfare effect of offshoring. Different to ambiguous wage effect conclusions of offshoring under Heckscher-Ohlin framework, the conclusions of this paper is clear-cut. Offshoring will benefit specific factor (skilled labour and land), hurts some non-specific factor (unskilled labour), and enl...

This paper examines the validity of the ̄ve fundamental theorems in the positive theory of international trade in a basic model of external economies of scale. It shows that some of these theorems are valid in more cases than the literature suggests. In particular, if global changes under the speci ̄ed adjustment mechanism are allowed, the Rybczynski and Stolper-Samuelson Theorems are always val...