International Trade and Investment.

The NBER's Program on International Trade and Investment met in Cambridge on March 16 and 17. James Harrigan, Federal Reserve Bank of New York, organized this program:

Robert Feenstra, NBER and University of California, Davis, and Gordon Hanson, NBER and University of Michigan, "Global Production and Rising Inequality: A Survey of Trade and Wages"

James Harrigan, "Comparative Advantage: Do the Data Obey the T Law?"

Donald Davis and David E. Weinstein, NBER and Columbia University, "The Factor Content of Trade"

Robert E. Lipsey, NBER and Queen's College, "Foreign Direct Investment and the Operations of Multinational Firms"

James Markusen, NBER and University of Colorado, and Keith E. Maskus, University of Colorado, "Multinationals"

Henry Overman, Stephen Redding, and Anthony J. Venables, London School of Economics, "Trade and Geography: A Survey of Empirics"

James R. Tybout NBER and Pennsylvania State University, "Plant and Firm-Level Evidence on 'New' Trade Theories"

Bruce Blonigen, University of Oregon, and Thomas Prusa, NBER and Rutgers University, "Antidumping"

Kishore Gawande, University of New Mexico, and Pravin Krishna, Brown University, "The Political Economy of Trade Policy"

Feenstra and Hanson argue that trade in intermediate inputs, or "outsourcing," is a potentially important explanation for the increase in the wage gap between skilled and unskilled workers in the United States and elsewhere. They show that trade in inputs has much the same impact on labor demand as does skill-biased technical change: both will shift demand away from low-skilled activities, while raising relative demand and wages of the higher skilled. Thus, distinguishing whether the change in wages is caused by international trade or technological change is fundamentally an empirical rather than a theoretical question. The authors review three empirical methods that have been used to estimate the effects of the outsourcing and technological change on wages, and summarize the evidence for the United States and other countries.

The theory of comparative advantage predicts that countries export goods that would have lower relative prices in the absence of trade. Harrigan reviews recent empirical research on this prediction. Much of this work focuses on output specialization rather than trade, arguing that most of the interest in the comparative advantage theory comes from the production side alone. Starting with the multidimensional generalization of the standard Heckscher-Ohlin model, authors have considered amendments that include unequal numbers of goods and factors, Ricardian...