Factor Endowments and Production in European Regions

44 Pages Posted: 12 Mar 2003

See all articles by Stephen J. Redding

Stephen J. Redding

Princeton University

Mercedes Vera-Martin

London School of Economics & Political Science (LSE) - Department of Economics

Date Written: February 2003

Abstract

This Paper analyses patterns of production across 14 industries in 45 regions from seven European countries since 1975. We estimate a structural equation derived directly from neoclassical trade theory that relates an industry's share of a region's GDP to factor endowments, relative prices and technology. Although factor endowments play a statistically significant and quantitatively important role in explaining production patterns, the Heckscher-Ohlin model is rejected against more general alternatives that allow for regional variation in relative prices and technology. Factor endowments are more successful at explaining patterns of production in aggregate industries (Agriculture, Manufacturing, Services) than in disaggregated industries within Manufacturing.

Keywords: Factor endowments, Heckscher-Ohlin, neoclassical model, specialization, European

JEL Classification: F11, F14, R13

Suggested Citation

Redding, Stephen J. and Vera-Martin, Mercedes, Factor Endowments and Production in European Regions (February 2003). Available at SSRN: https://ssrn.com/abstract=385913

Stephen J. Redding (Contact Author)

Princeton University ( email )

Princeton, NJ 08544-1021
United States

HOME PAGE: http://www.princeton.edu/~reddings/

Mercedes Vera-Martin

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 7800 (Phone)
+44 20 7955 7585 (Fax)

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