DEMAND, COMPARATIVE ADVANTAGE AND ECONOMIC-GEOGRAPHY IN INTERNATIONAL-TRADE - EVIDENCE FROM THE OECD

This paper examines the influence of demand on the pattern of net trad e for 17 OECD countries. It is found that demand differences are impor tant as a cause of international trade. In fact, for the majority of c ountries, demand factors explain more of the net trade pattern than do factor proportions. The evidence offers some support for the modern g eography and trade theories: high domestic demand in an industry leads to a net export for the majority of cases. The evidence is, however, not clear-cut. Moreover, a demand bias in favour of domestic varieties leads to a net export. Here, the evidence is clear-cut. JEL no. F11, F12.