A BEJM Contributions article.

Abstract

Development accounting exercises based on an aggregate production function find technology is biased in favor of a country's abundant production factors. We provide an explanation for 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 factor 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.

Submitted: March 15, 2007 · Accepted: June 23, 2007 · Published: July 25, 2007

Recommended Citation

Cuņat, Alejandro and Maffezzoli, Marco (2007) "Specialization Patterns and the Factor Bias of Technology," The B.E. Journal of Macroeconomics: Vol. 7 : Iss. 1 (Contributions), Article 16.
Available at: http://www.bepress.com/bejm/vol7/iss1/art16