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“Were Heckscher and Ohlin Right?” by O’Rourke Coursework

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Updated: Jul 23rd, 2022

To understand contemporary processes and tendencies in economy of the United Kingdom and the USA, it is necessary to pay attention to the historical peculiarities of their economic development. Kevin O’Rourke and Jeffrey Williamson present the complex discussion of the processes of factor-price convergence for these states with references to the works of famous economists and historians in their article “Late Nineteenth-Century Anglo-American Factor-Price Convergence: Were Heckscher and Ohlin Right?”.

The main objective of the article is to provide the discussion of the peculiarities of the factor-price convergence between the USA and the United Kingdom along with the analysis of the factor-price equalization theorem and Heckscher and Ohlin’s viewpoints. The major question of the work is “How much of the Anglo-American factor-price convergence between 1870 and 1895 or 1913 can be explained by the convergence in commodity prices?” (O’Rourke & Williamson, 1994, p. 895). The discussion of the problem is significant for modern economy because the process of convergence in the late nineteenth-century “was the dramatic start of world-commodity and factor-market integration that continues today” (O’Rourke & Williamson, 1994, p. 892).

Kevin O’Rourke and Jeffrey Williamson answer the main question of their article with references to a lot of evidences and works by economists and specialists in the field of economy (O’Rourke & Williamson, 1994). Moreover, they prove the main idea provided by Heckscher and Ohlin that “a significant share of the Anglo-American real-wage convergence was due to commodity-price convergence” (O’Rourke & Williamson, 1994, p. 892). O’Rourke and Williamson discuss the factor-price-equalization theorem and its meaning for the processes of convergence and economic integration (O’Rourke & Williamson, 1994). They concentrate on the facts of price shocks, the peculiarities of trade, capital mobility and other important factors in the economy of the countries and their relations.

That is why the article is divided into two parts. The first part presents the evidence which support the information about the features of commodity-price convergence in the 1870-1923’s. The material is based on the data presented in the form of tables which focus on the economy of the United Kingdom and the USA and the peculiarities of convergence. The second part of the work presents the analysis of the information and the impacts of the factors on the two economies which is given as Table 3. The price-factor became the key one for the analysis (O’Rourke & Williamson, 1994).

The analysis was worked out with the help of the discussion of definite models for Britain and the USA. The evidence from the tables based on the researches provided by famous economists and on the data of statistics. The information from the tables illustrates the peculiarities of US and British commodity markets and the factors for grain-market integration. O’Rourke and Williamson accentuate the characteristics of the models for Britain and the USA which consist of such sectors as manufacturing and mining, agriculture, and services and such factors as land, capital, and labor. However, these models have definite differences (O’Rourke & Williamson, 1994).

O’Rourke and Williamson have analyzed the results of their investigation in the conclusion part of their work and presented the conclusion in which stated that “commodity-price convergence would have raised nominal wages in each country by approximately the same rate” and “trade did have a powerful impact on factor prices, living standards, and income distribution in the United States and in Britain in the late nineteenth century” (O’Rourke & Williamson, 1994, p. 912). Moreover, they have supported the idea provided by Heckscher and Ohlin. The authors have stated that it is possible to continue the discussion of the problem with references to more evidences and paying much attention to the history of the economy in the other countries of New and Old World.

Reference List

O’Rourke, K. & Williamson J. G. (1994). Late nineteenth-century Anglo-American factor-price convergence: Were Heckscher and Ohlin right? The Journal of Economic History, 54, pp. 892-916.

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