This chapter applies a modified version of the factor content method of estimating the impact of North–South trade in manufactures on the skill composition of the demand for labour in both country groups. Its objective is to obtain a more accurate measure of the size of this impact, which is understated by standard calculations because they do not allow for the fact that much North–South trade in manufactures is noncompeting. Allowing for noncompeting imports, for defensive labour‐saving innovation induced by trade, and for indirect effects in non‐manufacturing sectors, the impact of this...

This chapter applies a modified version of the factor content method of estimating the impact of North–South trade in manufactures on the skill composition of the demand for labour in both country groups. Its objective is to obtain a more accurate measure of the size of this impact, which is understated by standard calculations because they do not allow for the fact that much North–South trade in manufactures is noncompeting. Allowing for noncompeting imports, for defensive labour‐saving innovation induced by trade, and for indirect effects in non‐manufacturing sectors, the impact of this trade on the composition of demand is estimated to be roughly 40 times as large as suggested by standard factor content of trade calculations.