The observational equivalence of the Ricardian and Heckscher-Ohlin explanations of trade patterns

This paper reviews the issue, first considered by J. L. Ford of the observational (as opposed to the logical) equivalence of the Ricardian and Heckscher-Ohlin explanations of trade patterns. A necessary and sufficient condition for local equivalence is derived and interpreted: loosely speaking, capital intensity and elasticities of substitution must be positively associated across sectors. However, it is shown that global equivalence may be prevented either by factor intensity reversals or by labour productivity reversals. Finally, it is noted that conditions which guarantee equivalence appear to be empirically plausible.

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