The Factor-Proportions Model with Many Nations, Goods and Factors: Theory and Evidence

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Abstract
This paper investigates implications of the factor-proportions trade model for a world with many nations, good and factors where none of the standard assumptions used to generate international equalization of product and factor prices necessarily hold. The model is tested on 1961 data for Canada, the U.S. and the rest of the world (ROW). The model fits observed multi- and bi-lateral trade patterns among the three regions well. Nonetheless, the Heckscher-Ohlin propositions do not hold on total U.S. or bilateral U.S.-ROW trade. They do hold for Canadian and Canada-U.S. bilateral trade.
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