A Note on International Trade and Market Structure
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In the last decade the United States' relative trading position among developed and undeveloped countries has weakened dramatically. Various reasons have been given to explain both the declining relative level of United States' exports and the new pattern and composition of United States' industry exports and imports. The standard Heckscher-Ohlin (H-O) international trade model simply implies that a country should export products which are produced from factors in relative abundance and import products which are produced from factors in relative scarcity. The United States is typically considered to be capital abundant and labor scarce. Leontief [1953, 1956], however, concluded that the U.S. tended to import relatively capital-intensive goods and export relatively laborintensive goods.2 Recent tests of U.S. trade patterns have concentrated on identifying the factors other than capital and labor that are important in the production * Professor Schneeweis is an Associate Professor of Finance at the University of Massachusetts/Amherst.He is on the editorial board of the Journal of BusinessResearch. He has published in numerousjournals in the areasof internationalbusiness strategy,investmentanalysisand financialfutures. Date Received:July 19, 1983; Revised:April23, 1984/September24, 1984;Accepted:September 28, 1984. 139
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JOURNAL OF INTERNATIONAL BUSINESS STUDIES, SUMMER 1985
process or on identifying the particular real world distortions which affect U.S. trade patterns. The empirical studies of various trade theories include single factor [Lutz and Green 1983] and multi-factor analyses [Baldwin 1971; Kilpatrick and Miller 1978; Harkness and Kyle 1975; Ster and Maskus 1981] . These empirical studies report contrasting results, however. Kilpatrick and Miller [1978] and Harknessand Kyle [1975] found capital intensity a significant positive factor in determining export flows, whereas Baldwin [1971] came to an opposite conclusion. In a recent study, Ster and Maskus [1981] use a 3-factor (physical capital, human capital and unskilled labor) model to explain U.S. net exports of manufacturersover the period 1958-76. They suggest that both employee skill and industry technology affect net exports positively. Stein's and Maskus' results support a product cycle theory in that the level of employee skill and the degree of industrial technology are often higher earlier in a firm's production cycle. Lutz and Green [1983] also suggest that the relative decline of U.S. manufactured exports is linked to the product life cycle theory. Studies [Lutz and Green 1983; Kilpatrick and Miller 1978] which indicate the importance of technology and new products on competitive export positions, have led to calls for more direct U.S. government involvement in the production process [Cohen 1977; Mullor-Sebastian 1983]. The results of this analysis provide further insight into the impor
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