Study on Economic Convergence Employing the 2.2.2 Model of Heckscher-Ohlin

Francisco Javier  Andrade Domínguez; Romina Lissette  Sánchez Centanaro; David Richard  Pincay Sancán; Xavier Fernando  Ortega Haro; Carolina Denisse  Barros Gavino; Miossotty Katherine  Naranjo Kean Chong; Juan Carlos  Alarcón Gavilanes; María Auxiliadora  Falconí Tello

doi:10.36941/ajis-2024-0123

Authors

Francisco Javier Andrade Domínguez Universidad Estatal de Milagro, Milagro, Ecuador
Romina Lissette Sánchez Centanaro Universidad Estatal de Milagro, Milagro, Ecuador
David Richard Pincay Sancán Universidad Estatal de Milagro, Milagro, Ecuador
Xavier Fernando Ortega Haro Universidad Estatal de Milagro, Milagro, Ecuador
Carolina Denisse Barros Gavino Universidad Estatal de Milagro, Milagro, Ecuador
Miossotty Katherine Naranjo Kean Chong Universidad Estatal de Milagro, Milagro, Ecuador
Juan Carlos Alarcón Gavilanes Escuela Superior Politécnica de Chimborazo, Ecuador
María Auxiliadora Falconí Tello Escuela Superior Politécnica de Chimborazo, Ecuador

DOI:

https://doi.org/10.36941/ajis-2024-0123

Keywords:

Intra-industry trade, production function, economic convergence

Abstract

This article presents a methodology to estimate disparities in factor endowments in a dynamic Heckscher-Ohlin model. The model integrates a static approach to intraindustry trade of two goods and two factors. By employing a Cobb-Douglas production function model (2 goods, 2 factors), we identify convergences and divergences in production, influenced by the elasticity of substitution between inputs. Our findings illustrate that, even if factor prices equalize, countries differing only in their initial capital-to-labor ratios may converge or diverge in income levels over time. Divergence can occur for parameter values that would imply convergence in a world of closed economies, and open ones.

Received: 15 March 2024 / Accepted: 16 June 2024 / Published: 02 July 2024