Modelling the factor content of agricultural trade

Abstract

This article examines factor content of agricultural trade in the Central and East European (CEE) transition countries. It relates the factor content of agricultural trade to cross-country differences in technology stemming from different farm organisations between CEE countries agricultural sectors and to differences in relative factor endowments. Relative factor endowments alone do not satisfactorily explain agricultural trade flows in the CEE countries. We find that transaction costs and market imperfections that affect the organisation of production also distort farm specialisation and hence factor content of agricultural trade.