The factor content of international trade without factor-price equalization
Within the basic two-factor multi-commodity model of a two-country world, the present paper shows that international factor-price equalization is unnecessary for deriving the Heckscher-Ohlin theorem in its factor-content version, according to which the bundle of goods exported by the capital-abundant country will use more capital and less labour than the bundle exported from the labour-abundant country. The factor-content version remains valid when the model is generalized to include trade impediments, intermediate goods or additional countries, except perhaps if the first of these extensions is combined with either of the other two.
|Journal||Journal of International Economics|
Brecher, R.A, & Choudhri, E.U. (1982). The factor content of international trade without factor-price equalization. Journal of International Economics, 12(3-4), 277–283. doi:10.1016/0022-1996(82)90040-X