Page "Heckscher–Ohlin model" Paragraph 52

where is the net trade of factor service vector for country, the factor endowment vector for country, and the country's share of the world consumption and the world total endowment vector of factors.

For many countries and many factors, it is possible to estimate the left hand sides and right hand sides independently.

To put it another way, the left hand side tells the direction of factor service trade.

Thus it is possible to ask how this system of equations holds.

The results obtained by Bowen, Leamer and Sveiskaus ( 1987 ) was disastrous.

They examined the cases of 12 factors and 27 countries for the year 1967.

They found that the both sides of the equations had the same sign only for 61 percent out of 324 cases.

For the year 1983, the result was more disastrous.

Both sides had the same sign only for 148 cases out of 297 cases ( or the rate of correct predictions was 49. 8 %).

The results of Bowen, Leamer and Sveiskaus ( 1987 ) mean that the Hecksher – Ohlin – Vanek theory has no predictive power concerning the directions of trade.