A Multiregional Input-Output Model of the World Economy

Abstract

From the time Ricardo proposed to explain international exchange of goods and services in terms of their comparative (or opportunity) costs, pure theory of international trade was dominated by the general equilibrium approach. Professor Ohlin deepened the foundation of its original classical formulation by showing that differences in comparative costs can in their turn be explained by regional differences in the relative supply of labour, capital and natural resources. Because of the obvious practical difficulties of empirical implementation of any general equilibrium theory, most of the concrete quantitative explanations of actually observed interregional flows of goods and services have, nevertheless, been conducted in terms of the Marshallian partial equilibrium approach.