The Heckscher-Ohlin Model and the Network Structure of International Trade

Posted: 6 Aug 2012

See all articles by Tilman Brück

Tilman Brück

IGZ - Leibniz Institute of Vegetable and Ornamental Crops; ISDC - International Security and Development Center; IZA Institute of Labor Economics

Thushyanthan Baskaran

University of Goettingen (Göttingen)

Florian Blöchl

affiliation not provided to SSRN

Fabian J. Theis

Technische Universität München (TUM); Helmholtz Zentrum München - Institute of Computational Biology

Date Written: 2011

Abstract

This paper estimates for 28 product groups a characteristic parameter that reflects the topological structure of its trading network. Using these estimates, it describes how the structure of international trade has evolved during the 1980–2000 period. Thereafter, it demonstrates the importance of networks in international trade by explicitly accounting for their scaling properties when testing the prediction of the “Heckscher–Ohlin” model that factor endowment differentials determine bilateral trade flows. The results suggest that factor endowment differentials increase bilateral trade in goods that are traded in “dispersed” networks. For goods traded in “concentrated” networks, factor endowment differentials are less important.

Keywords: Networks, International trade, Gravity model

JEL Classification: F10, F15, L14

Suggested Citation

Brück, Tilman and Baskaran, Thushyanthan and Blöchl, Florian and Theis, Fabian J., The Heckscher-Ohlin Model and the Network Structure of International Trade (2011). International Review of Economics & Finance, Vol. 20, No. 2, 2011, Available at SSRN: https://ssrn.com/abstract=2125013

Tilman Brück

IGZ - Leibniz Institute of Vegetable and Ornamental Crops ( email )

Theodor-Echtermeyer-Str. 1
Grossbeeren, 14979
Germany

HOME PAGE: http://www.igzev.de

ISDC - International Security and Development Center ( email )

Friedrichstr. 88
Berlin, 10117
Germany

HOME PAGE: http://www.isd-center.org

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Thushyanthan Baskaran (Contact Author)

University of Goettingen (Göttingen) ( email )

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

Florian Blöchl

affiliation not provided to SSRN ( email )

Fabian J. Theis

Technische Universität München (TUM) ( email )

Arcisstrasse 21
Munich, DE 80333
Germany

Helmholtz Zentrum München - Institute of Computational Biology

Germany

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