Recent theoretical developments have cast doubt on the reliability of the
commonly used cross-industry regression as a method for inferring a country's
abundant factors. This paper examines the empirical importance of these
theoretical cautions by comparing regression derived estimates of factor
abundance with both revealed and actual factor abundances for thirty-five
countries and up to twelve resources. Trade imbalances are found to
importantly affect the regression estimates and we therefore derive and
implement a theoretically consistent trade balance correction. The results
indicate that despite theoretical concerns, the regression measures are often
reliable indicators of revealed factor abundances. The results therefore
enhance the credibility of the findings of the numerous regression studies that
have been conducted over the past thirty years.
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