Factor Endowments and Production in European Regions
44 Pages Posted: 12 Mar 2003
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: Suggested Citation
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