The factor proportions theory in international trade and finance

My dissertation reexamines the factor proportions theory and its main theorems, placing specific emphasis on the (dis)similarity of country endowments. This particular perspective casts a new light on the well-established empirical literature. It also introduces an explicit link between international trade and international finance. In a first essay, "On the Similarity of Country Endowments and Factor Price Equalization", the condition of the Factor Price Equalization Theorem (FPE) that restricts the dissimilarity of country endowment ratios is evaluated empirically for different groups of countries. The rich OECD countries are found to be similar enough to allow for FPE. For a mixed group that includes both developing and developed countries, such is not the case, however.;The second essay, "International Saving, Investment and Trade" shows how the Rybczynski Theorem provides an answer to the long-standing Feldstein-Horioka puzzle in international finance for the similarly endowed OECD countries. The argument is that international trade together with sectoral shifts in production due to changing endowments will take away the incentives for international capital flows.;The third essay, "Endowments Do Matter. Relative Factor Abundance and Trade" tests a variant of the Heckscher-Ohlin-Vanek (HOV) hypothesis for the case when FPE fails. It overturns the pessimism in the literature and shows that the essence of the HO hypothesis is preserved: Endowments do matter for the pattern of trade. The methodology hinges on a country pair approach that allows for a specification of the test in terms of the endowment ratios (relative factor abundance).;Whereas the third essay investigates a cross section of countries, in the fourth one, "Factor Abundance and Comparative Advantage in the Long-Run. Belgium vs. the UK", the HOV model is traced through time. The focus here is on the United Kingdom and Belgium over the past century. Some support is found in favor of HOV that is independent of Hicks neutral technological differences.