Skill, trade, and international inequality

Heckscher-Ohlin trade theory suggests that greater opennesstends to enlarge inter-country differences in stocks of skill(or human capital), which new growth theory suggests would causeinter-country divergence of per capita incomes. Econometricanalysis of data on about 90 countries during 1960-90 confirmsthat greater openness tends to cause divergence of secondaryand tertiary enrolment rates between more-educated and less-educatedcountries, and also between land-scarce and land-abundant countries.These findings may have implications for the optimal choiceof trade policies by poor countries.