TECHNICAL DIFFERENCES AND INTERINDUSTRY TRADE IN THE NORDIC COUNTRIES

Inter-industry specialization in intra-Nordic trade is studied in the context of a simple model where technical differences and capital-labo ur ratios interact in determining net export. The empirical test large ly concurs with the theory. Countries are net exporters in industries where their relative labour productivity is high and where they have h igh R&D expenditures. In addition, countries are net exporters in indu stries thta make intensive use of their abundant factor.