The commodity pattern of trade and the Heckscher-Ohlin theorem in the presence of aggregate and commodity-specific factor-intensity reversals

Abstract

Theoretical analyses of the HO theorem's prediction of the commodity pattern of trade in the multicommodity two-factor model tend to assume away factor-intensity reversals, but the empirical literature has investigated whether reversals between individual goods' technologies are prevalent phenomena with the evidence then being presented as bearing upon the HO theorem. Since the consequence of a factor-intensity reversal for the theorem is well defined in the (2 × 2 × 2) model, we establish via aggregation over individual goods' technologies an analogue (2 × 2 × 2) setting for the multicommodity model. The implications of factor-intensity reversals in commodity-specific technologies for the reversal behavior of the aggregate technologies and for the HO theorem are examined. Commodity-specific reversals such as are the focus of the empirical studies are shown to have no direct bearing upon the theorem.