Factor mobility and international trade

Journal article

This paper develops a two-country model of trade and factor mobility, in which capital is sector-specific but internationally mobile. The model avoids the indeterminacy and propensity to specialize of Heckscher-Ohlin models and exhibits a rich variety of responses to exogenous shocks, including transfers, capital taxes, and tariffs. The results throw light on the relationship between goods and factor trade, reconciling the conflicting views of previous writers. It is argued that the model holds out the possibility of a new paradigm in international trade theory in which international factor movements play a central rather than a peripheral role.

Authors: Neary, J

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Blackwell Publishing
• Journal: Canadian Journal of Economics
• Volume: 28
• Issue: Special Issue: Essays in International Economics in Honour of Douglas Purvis
• Pages: S4-S23
• Publication date: 1995-11-01
• ISSN: 0008-4085
• Language: English
• Keywords: international trade
• Subjects: Economics