ABSTRACT
The new tool is used with considerable skill in a statistical inquiry designed to test and, as it turns out, to disprove one of the factual assumptions of the much-debated Hecksher-Ohlin interpretation of the classical theory of international trade. In quantitative empirical analysis, the CES function can perform essentially the same role that the Cobb-Douglas function played up until now, but, owing to its less restrictive shape, it offers at the same time the indisputable advantage of greater flexibility. This chapter devoted to systematic statistical description and international comparison of the rates of return on capital in different industries. The factual assumption of the modern theory of international trade that Minhas sets out to disprove is that a meaningful distinction can be made between capital- and labor-intensive industries, a distinction that incidentally plays a crucial role in analysis of economic development.
