Comparative Advantage in U.S. Interstate Forest Products Trade
According to the Heckscher-Ohlin-Vanek theorem, the net exports of a region are determined by relative abundance of the immobile factors of production. Empirical tests of this theory, usually at a high level of aggregation, have frequently not supported it. We find, instead, that data on interstate trade in wood products within the United States are in strong agreement with the theorem. Other things equal, net exports of wood products are strongly and positively related to the stock offorest resources. The simplest evidence is the correlation of net exports with forest growing stock, per dollar of state prod- uct. A more formal development of the theory leads to a linear model where net exports are negatively related to gross state product and positively related to forest resources. The model predicts better the net exports of lumber and wood products (SIC 24) than those of paper and allied products (SIC 26). For both industries, and for their sum, the marginal effect of additional hard- wood growing stock on net exports is larger than that of softwood. However, given the variation in hardwood and softwood growing stock among states, both types of resource were equally important in determining the variation in comparative advantage. The empirical HOV models changed little from 1976 to 1991, except for a decrease in the relative importance of softwood growing stock as a determinant of net exports.