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John P. Burkett
Executive Director, ISIAC
Department of Economics
University of Rhode Island
806 Chafee Hall, 10 Chafee Road
Kingston, RI 02881–0808
phone (401) 874–9195
fax (401) 874–2858
Pulpit rock


Cones of Diversification in a Model of Comparative Advantage

John P. Burkett

Institute for the Study of International Aspects of Competition

Working Paper 95-2

The hypothesis that all countries belong to a single cone of diversification is often used in studies of international trade but seldom tested. In this paper the one-cone hypothesis is tested against a two-cone alternative by clustering countries with similar factor proportions, estimating regressions for gross national product and net exports, and applying standard tests for equality of coefficients. Rejecting the one-cone hypothesis, the paper presents estimates of a two-cone model and considers their implications for factor flows and the prospects of emerging market economies.

JEL classification: F12

Key words: international trade; cones of diversification.

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