Abstract
In this paper intra-regional trade among Central American countries is analyzed from two perspectives: intra-industry trade (IIT) and revealed comparative advantage. The results show moderate to low levels of IIT, and the presence of many products with revealed comparative advantage. This “indirect test” of trade theories for intra-Central American trade favors the Heckscher-Ohlin theorem over the new theories based on increasing returns and product differentiation. This suggestion, however should not be taken as conclusive since they are not direct tests of the theories of international trade.
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