Definitions of Factor Abundance and the Factor Content of Trade

Abstract

This paper points out that the different definitions of factor abundance in the empirical trade literature are weaker than in the Heckscher-Ohlin model, which compares endowments of two factors across two countries. These different definitions in practice lead to different factor abundance rankings when there are three or more countries or factors. A lack of correlation between a weak measure of factor abundance and the factor content of trade provides no ground to claim that factor proportions trade theory fails. A working definition of factor abundance more in line with the traditional one is proposed. [PUBLICATION ABSTRACT]