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Abstract

The paper studies the factor content of agricultural trade in the EU. We examine the relative abundance for labour, capital and land in old and new EU member states, and test the Hechscher-Ohlin (HO) hypothesis in two different settings: the standard and a more general. Our empirical findings suggest that the HO model performs better in the developed market economy trade than in the CEE transition country trade. The relative factor price distortions during the central planning period might be responsible for this. Second, we find that the HO model performs considerable better when relaxing the factor price equalisation between countries. These findings support the more general versions of the HO model.

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