explain steady-state differences in income and in factor intensity. Section III presents a brief
reinterpretation of the applied literature in light of the standard Solow diagram and shows
that an empirical specification of the Solow model that allows for international technology
differences and presumes a constant capital–output ratio provides an excellent description
of the cross-country data. Section IV uses this stylized fact to reconsider the neoclassical
model of trade and growth (Findlay and Grubert, 1959). Given the Solow model, Harrodneutral
differences in technology cannot be separated from steady-state differences in capital
intensity, which implies that the factor endowment point in the Lerner diagram should not
be treated as independent from the level of (Harrod-neutral) technology. Up to now, this
implication appears to have been neglected in the empirics of international trade.