A multicountry use of input -output tables to test the Heckscher -Ohlin theorem accounting for actual imports

This dissertation presents a modification of the original framework implemented by Wassily Leontief to test the validity of one of the most venerable theories of international trade. Most major empirical investigations of the Heckscher-Ohlin theorem using the Leontief approach have concentrated on the limited framework. In this dissertation, we empirically examine the determinants of the structure of foreign trade for the most developed nations (i.e., Australia, Canada, Denmark, France, Germany, Italy, Japan, the United Kingdom and the United States) over the period 1968–1996. The data set used represents the most extensive data set available to document the pattern of industrial specialization and factor endowment differences. Our analyses are based on the factor content version of the Heckscher-Ohlin model using first the original Leontief method for the United States and for each of the remaining countries mentioned. Then, the input-output tables are used to measure the capital-labor content of each industry. This approach allows us to detect the presence of factor intensity reversal, the only assumption that cannot be relaxed in the Heckscher-Ohlin theory. Last, we introduce a modification in the balance equations of the general system used as a framework to test the validity of the Heckscher-Ohlin theory. The results of this study should be enriching for international trade economists. The study does validate the use of the underlying general equilibrium model as originally intended by Wassily Leontief but never implemented due to lack of concrete quantitative information. The principal premise of the Heckscher-Ohlin model, formerly questioned, has proven to hold for all or the majority of the years of our study resulting in trade patterns that promote prosperity within a nation