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Factor Endowments and Production in European Regions

Review of World Economics volume 142, pages 1–32 (2006)Cite this article

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.

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Author information

Authors and Affiliations

  1. Department of Economics, London School of Economics, Houghton Street, London, WC2A 2AE, United Kingdom

    Stephen Redding

  2. International Monetary Fund, Washington, D.C., USA

    Mercedes Vera-Martin

Authors
  1. Stephen Redding
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  2. Mercedes Vera-Martin
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Corresponding author

Correspondence to Stephen Redding.

Additional information

JEL no.

F11, F14, R13

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Cite this article

Redding, S., Vera-Martin, M. Factor Endowments and Production in European Regions. Rev. World Econ. 142, 1–32 (2006). https://doi.org/10.1007/s10290-006-0055-y

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  • DOI: https://doi.org/10.1007/s10290-006-0055-y

Keywords

  • Factor endowments
  • Heckscher–Ohlin
  • neoclassical model
  • Europe