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Title: Specialization Patterns and the Factor Bias of Technology

Author(s): Alejandro Cuñat and Marco Maffezzoli

Publication Date: May 2007

Keyword(s): Development Accounting, Heckscher-Ohlin, International Trade and Simulation

Programme Area(s): International Trade and Regional Economics

Abstract: Development accounting exercises based on an aggregate production function find technology is biased in favour of a country's abundant production factors. We provide an explanation to this finding based on the Heckscher-Ohlin model. Countries trade and specialize in the industries that use intensively the production factors they are abundantly endowed with. For given endowment ratios, this implies smaller international differences in factor price ratios than under autarky. Thus, when measuring the factor bias of technology with the same aggregate production function for all countries, they appear to have an abundant-factor bias in their technologies.

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Bibliographic Reference

Cuñat, A and Maffezzoli, M. 2007. 'Specialization Patterns and the Factor Bias of Technology'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6290