This benign neglect of steady-state implications for the type of technological differences
to be used in models of trade and growth also surfaces in recent empirical studies of trade.
These studies have emphasized that the well-known failure of the static HO model to predict
observed trade patterns on the basis of factor endowments no longer prevails once the
absence of factor price equality, even across countries with similar factor endowments, can
be motivated by Hicks-neutral cross-country differences in technology or a multiple-cone
equilibrium.12 As discussed in the previous sections, the cross-country version of the Solow
model would predict that differences in Harrod-neutral technology explain cross-country
differences in output per worker and capital per worker. Translating this basic insight into
the Lerner diagram appears to provide an additional argument why a HO model without
technology differences is likely to fail to predict the pattern of trade among countries with
different levels of income.