LINDER'S TRADE THESIS: AN EMPIRICAL EXAMINATION.

The primary purpose of this paper is to 1 Discussions of empirical tests of comparative costs theories can be found in Hufbauer [3] and Moroney [6]. 2 It should be noted that Linder's original work [5] is based on trade of all commodities further examine the empirical validity of Linder's hypothesis that trade in manufacturing commodities is demand oriented. In addition we will pursue the question of the importance of the "distance factor" as a determinant of manufacturing trade patterns. This question, initially raised by Linder, was first evaluated empirically by Fortune [1] and more recently by Hoftyzer [2].
It appears from the foregoing analysis that while trade patterns in manufactured goods may be related to demand in the manner hypothesized by Linder, this relation is not sufficiently strong to explain trade patterns among the regions studies herein. However, this analysis provides a fairly clear indication that is suggested by Linder, the "distance factor" is an important determinant of trade patterns in manufactured goods. The fact that distance appears to be more closely (and significantly) related to trade patterns should not, however, be interpreted as a refutation of Linder's hypothesis. As had been implied by others who have investigated the empirical validity of the Linder hypothesis [8], the evidence is as yet too scattered to warrant sweeping conclusions. Moreover, it should be noted that the findings reported herein are based on trade patterns among regions rather than nations. [ABSTRACT FROM AUTHOR]