Testing Heckscher-Ohlin-Vanek in the G-7

Abstract

Testing Heckscher-Ohlin-Vanek in the G-7. —This paper extends previous tests of the Heckscher-Ohlin-Vanek (H-O-V) model by restricting testing to a group of countries expected to best conform to the assumptions of the model. Specifically, this study restricts the sample to the G-7 countries which are similar in relative endowments and technology. In this sample, limited empirical support for H-O-V is found in the “rank” test of factors across countries and the regressions. The results suggest that serious consideration of the assumptions of the model may improve the concordance of the theory to the data.