Review of World Economics

, Volume 142, Issue 1, pp 1–32

Factor Endowments and Production in European Regions

Article

DOI: 10.1007/s10290-006-0055-y

Cite this article as:
Redding, S. & Vera-Martin, M. Rev. World Econ. (2006) 142: 1. doi:10.1007/s10290-006-0055-y
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Abstract

This paper analyses patterns of production across 14 industries in 45 regions from 7 European countries since 1975. We estimate an equation from neoclassical trade theory that relates an industry’s share of a region’s GDP to factor endowments, relative prices and technology. The strict version of the Heckscher–Ohlin model that assumes identical relative prices and technology is rejected against more general alternatives. However, factor endowments play a statistically significant and quantitatively important role in explaining production patterns. Factor endowments are more successful at explaining patterns of production in aggregate industries (Agriculture, Manufacturing and Services) than in disaggregated industries within manufacturing.

Keywords

Factor endowmentsHeckscher–Ohlinneoclassical modelEurope

Copyright information

© The Kiel Institute 2006

Authors and Affiliations

  1. 1.Department of EconomicsLondon School of EconomicsLondonUnited Kingdom
  2. 2.International Monetary FundWashingtonUSA