Exporting manufactures: Human resources, natural resources, and trade policy

Abstract

Whether a country's exports consist mainly of manufactures or mainly of primary products depends fundamentally on the skills of its labour force, relative to the extent of its natural resources. This proposition, derived from a modified version of Heckscher‐Ohlin theory, is supported by a strong cross‐country correlation between the manufactured/primary export ratio and the skill/land ratio. Cross‐country variation in trade policies is now only a minor cause of variation in the manufactured/primary export ratio.