EXPLAINING TRADE IN INDUSTRIALIZED COUNTRIES BY COUNTRY-SPECIFIC HUMAN-CAPITAL ENDOWMENTS

This paper simultaneously incorporates, for the first time, three diff erent country-specific human capital endowments to analyse the impact of human capital on trade performance. Within a Heckscher-Ohlin-Vanek model, the factor endowments of intermediate and highly-skilled labour and technological knowledge are distinguished to explain the trade pe rformance of 14 industrialized countries. Contrary to previous empiric al studies, the results show that the Heckscher-Ohlin-Vanek model is s till of value for explaining international trade flows. The estimation results suggest that an abundance of highly-skilled labour and techno logical knowledge in a country indicates a comparative advantage for t he technology-intensive sectors, and a comparative disadvantage for th e labour-intensive sectors.