Technology and endowments as determinants of comparative advantage: Evidence from Mexico

We analyze whether the pattern of Mexico's comparative advantages in manufacturing trade flows, vis-a-vis its closest competitors, are related with productivity differentials (Ricardian hypothesis) or with differences in factor endowments (Heckscher-Ohlin hypothesis). The results suggest that Heckscher-Ohlin determinants tend to be more relevant than labor productivity differentials to explain the differences in the export patterns between Mexico and its competitors. This result holds even when we restrict the analysis to Mexico and other countries with relatively small differences in factor endowments, although in this case Ricardian comparative advantages gain some relevance. (C) 2011 Elsevier Inc. All rights reserved.