With a modified formalization of Heckscher–Ohlin theory as the basis of a novel econometric specification, this paper uses worldwide data over three decades to estimate how the effects of greater openness on industrialization vary among countries with differing endowments of land relative to labour. The results confirm the theoretical prediction that greater openness reduces manufactured output shares in land-abundant countries, while increasing them in land-scarce countries. The implications of these results for trade and development policy are debatable.

The central question of this paper is how international trade and specialization are affected by different designs of pension schemes and asymmetric demographic changes. In a model with two goods, two countries and two production factors, we find that countries with a relatively large unfunded pension scheme will specialize in the production of labour intensive goods. If these countries are hit by a negative demographic shock, this specialization will intensify in the long run. Eventually, these countries may even completely specialize in the production of those goods. The effects spill over to other countries, which will move away from complete specialization in capital intensive goods as the relative size of their labour intensive goods sector will also increase.

One of the key issues facing the UK in the wake of the advisory referendum result to leave the European Union is the precise nature of its relationship with the European Union. At one extreme would be continued membership in the European Economic Area, including membership in the single market. Other options would be either no free trade agreement (FTA) with the EU at all or a less comprehensive FTA which stops short of single market membership. This paper compares the ability of EEA membership and less comprehensive FTAs to generate trade in goods and services. We investigate this question using empirical gravity model methodology and the most recent available data from 42 countries. We use recently developed econometric methods to deal with observations of zero trade flows and issues connected with endogeneity. The main finding is that while EEA membership is associated with substantial and statistically significant increases in bilateral services trade flows, membership in less comprehensive FTAs is not associated with any significant increase in bilateral services trade. For goods, EEA membership is associated with larger bilateral trade flows than are less comprehensive FTAs. These results suggest that it might be difficult to replace, on an exit from a European Union, lost trade flows with the EU by means of shallower FTAs with the EU or with third countries.

United States consumer confidence in food safety is an increasingly more prominent issue in food production and marketing. Estimating the welfare effects of a breakdown in the supply chain can provide a benchmark for the cost of potential future events. In 2006, United States long grain rice stocks were contaminated with an unapproved genetically modified rice variety causing trade disruptions predominantly between the United States and the European Union. Using a spatial partial equilibrium model the economic effects of European policy on bilateral trade flows and prices during this event was an estimated loss of $421.3 million US dollars.

In order to estimate demand elasticities of source differentiated beef in South Korea, this study used the quantity of an endogenous demand system derived through maximizing the economic welfare of market participants including local beef consumers and local and foreign beef suppliers. The demand system is then weighted with respect to quality adjustment parameters to identify the effects of quality differences in source differentiated beef on market demand. As implied by the high relative price of locally produced “Hanwoo” beef, substitutability between local and imported beef is shown to be very weak and the own price elasticity of South Korean beef is shown to be inelastic. Related to quality differences between source differentiated beef, South Korean beef consumers show a preference for Australian beef relative to U.S. and Canadian beef, perhaps due to BSE concerns.

In a two-country Ricardian model, we study the dynamics of intersectoral reallocation of labour following upon a once and for all move to free trade. The job creation/destruction process in both sectors is slow and this results in unemployment during the transition toward the long run free trade equilibrium. We identify different free trade regimes depending on whether or not the world relative price is between the two autarkic prices. In some regimes, one of the two countries overshoots its autarkic equilibrium i.e. temporarily specializes according to its comparative disadvantage. In that case, welfare increases in both countries. In other regimes, the adjustment process is monotonic in both countries but welfare increases in only one country. When the two countries have “very” different rates of job creation/ destruction, the world price adjusts in such a way that the difference in adjustment speed between the two countries decreases.