Comparative Advantages, Transaction Costs and Factor Content of Agricultural Trade: Empirical Evidence from CEE

The present study examines factor content of the CEE transition country agricultural trade. We examine the relative country abundance for labour, capital and land, and test the Heckscher-Ohlin-Vanek (HOV) hypothesis. Our empirical findings suggest that the factor content of agricultural exports and imports is rather similar in CEE and most of the agricultural trade flows do not satisfy the HOV prediction. In order to explain the general lack of agricultural specialisation and the observed paradox in the CEE's agricultural trade, we examine the role of transaction costs and market imperfections. We find that transaction costs and market imperfections distort farm specialisation and hence factor content of agricultural trade.


Issue Date:
2009
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/115421
Total Pages:
34
JEL Codes:
F12; F14; D23; Q12; Q17
Series Statement:
Working Paper
2008-04




 Record created 2017-04-01, last modified 2017-08-26

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