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A Technique for Indicating Comparative and Perdicting Changes in Trade Ratios



This paper estimates relative differences in factor prices (and thus industry comparative cost differences) between the United States and each of eight country groups by relating differences in factor-use requirement and actual bilateral export/import ratios across industries. Predictions concerning changes in industry export/import ratios are also made (and tested against actual subsequent changes) by comparing these trade ratios with those expected on the basis of the estimated average differences infactor costs and assuming that adjustment lags are the major reason for the differences between these ratios.

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