Explaining trade in industrialized countries by country-specific human capital endowments

This paper simultaneously incorporates, for the first time, three different country-specific human capital endowments to analyse the impact of human capital on trade performance. Within a Heckscher-Ohlin-Vanek model, the factor endowments of intermediate and highly-skilled labour and technological knowledge are distinguished to explain the trade performance of 14 industrialized countries. Contrary to previous empirical studies, the results show that the Heckscher-Ohlin-Vanek model is still of value for explaining international trade flows. The estimation results suggest that an abundance of highly-skilled labour and technological knowledge in a country indicates a comparative advantage for the technology-intensive sectors, and a comparative disadvantage for the labour-intensive sectors.