Factor Intensity Reversals Redux

Author Name KIYOTA Kozo (Research Associate, RIETI) / KUROKAWA Yoshinori (University of Tsukuba)
Creation Date/NO. March 2017 17-E-021
Research Project Microeconometric Analysis of Firm Growth
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Little evidence for factor intensity reversals (i.e., reversals of capital/labor ratios) among countries or regions has been found in previous empirical studies. This supports Samuelson's (1951) view that factor intensity reversals are of theoretical interest rather than empirical importance. Using newly developed region-level data, however, we argue that the abandonment of factor intensity reversals in the empirical analysis has been premature. Specifically, we find that the degree of the factor intensity reversals is higher than that found in previous studies on average. Moreover, the degree of the factor intensity reversals has increased over the last two decades. Finally, the degree of the factor intensity reversals is higher when we use disaggregated industry-level data, weakening a possible criticism that several factor intensity reversals may be a result of the aggregation of industries.

Forthcoming: Kiyota, Kozo, and Yoshinori Kurokawa. "Factor intensity reversals redux: Feenstra is right!," Review of International Economics.