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"Conventional trade theory, which combines the Heckscher-Ohlin theory and the Stolper-Samuelson theorem, implies that … expanded trade between developed and developing countries will increase wage inequality in the developed countries. This theory … conventional theory to the assumption of incomplete specialization and find evidence that is not consistent with it. Since 1987 …
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We recount East Asia's experience with foreign direct investment (FDI). We document that, contrary to the Rybczynski theorem, capital flows in the region cause the host country's labor-intensive industry to expand and its capital-intensive industry to decline. We also present narrative evidence...
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