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By Emilio Acerbi,Giuseppe Buttazzo

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2: 11 Index of intra-industry trade" in textiles and clothing, various industrial market economies, 1965 to 1987 (per cent in value terms) Australia Canada France Textiles 1965-69 1975-79 1985-87 91 87 77 72 73 64 -32 5 12 Clothing 1965-69 1975-79 1985-87 66 90 91 54 65 67 -27 -6 25 West Germany Hong Kong Italy Japan Sweden United Kingdom United States 7 1 -10 31 44 58 -52 -32 -27 -86 -49 -39 60 44 31 -20 5 30 25 -8 38 32 48 46 -86 -86 -47 -85 -79 -72 -90 44 63 52 60 67 10 21 31 59 74 91 a Imports minus exports as a percentage of imports plus exports.

5 This modification separates out natural resources from Johnson's broad definition of capital, and integrates the model with the specific-factors model that has become popular again. It then becomes a model of an economy with two tradable sectors, producing primary products and manufactures, and three factors of production: natural resources which are specific to the primary sector, capital which is specific to the manufacturing 4 The use of value added per worker as a measure of the overall capital intensity of production was first used to discuss US imports of manufactured goods from developing countries by Lary (1968).

3) These regression equations are clearly consistent with the theory of changing comparative advantage presented above, with the latter equation suggesting the share of textiles and clothing in manufacturing exports declines at an increasing rate as income per capita rises. 1. They are (a) that the shares of primary products in total exports and of textiles and clothing in manufactured exports will be higher in developing economies than in advanced industrial economies, (b) that these shares will tend to decline over time in all economies, (c) that the declines will be faster in economies that are growing relatively 8 Since many empirical studies are available with such evidence, only a small sample is presented here.

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