Technical Differences and Inter-Industry Trade in the Nordic Countries

Interindustry specialization in intra-Nordic trade is studied in the context of a simple model where technical differences and capital-labor ratios interact in determining net export. The empirical test largely concurs with the theory. Countries are net exporters in industries where their relative labor productivity is high and where they have high R&D expenditures. In addition, countries are net exporters in industries that make intensive use of their abundant factor.