What does the Heckscher-Ohlin theorem state?

What does the Heckscher-Ohlin theorem state?

The Heckscher-Ohlin (H-O) theorem. It states that the capital-abundant country will export the capital-intensive good and the labor-abundant country will export the labor-intensive good.

What are the assumptions of Heckscher-Ohlin theory of international trade?

Assumptions of the Heckscher-Ohlin Model It is assumed that there are only two nations (1 and 2) with two goods for trade (X and Y) and two factors of production (capital and labour). For producing the goods, both nations use the same technology and they use uniform factors of production.

Who propounded Heckscher-Ohlin theory?

Eli Heckscher The Heckscher–Ohlin theorem is one of the four critical theorems of the Heckscher–Ohlin model, developed by Swedish economist Eli Heckscher and Bertil Ohlin (his student).

What are the advantages of Heckscher-Ohlin theory?

Heckscher–Ohlin asserts that differences in comparative advantage come from differences in factor abundance and in the factor intensity of goods. Specifically, Heckscher–Ohlin predicts that countries will produce relatively more of the goods that use their relatively abundant factors relatively intensively.

How many factors are there in the Heckscher-Ohlin model?

two The H-O model is a two-country, two-good, two-factor model that assumes production processes differ in their factor intensities, while countries differ in their factor abundancies.

How does the Heckscher-Ohlin HO model differ from the specific factors SF model?

How does the Heckscher-Ohlin (HO) model differ from the specific factors (SF) model? SF allows a third factor that is used in each of two goods which HO does not.

Is Heckscher-Ohlin long run?

Free mobility makes the Heckscher-Ohlin (H-O) model a long-run model.

How many factors are there in the Heckscher Ohlin model?

two The H-O model is a two-country, two-good, two-factor model that assumes production processes differ in their factor intensities, while countries differ in their factor abundancies.

What does the Heckscher Ohlin theory assert best explains a country's comparative trade advantage?

Heckscher-Ohlin asserts that differences in comparative advantage come from differences in factor abundance and in the factor intensity of goods. Specifically, Heckscher-Ohlin predicts that coun- tries will produce relatively more of the goods that use their relatively abundant factors relatively intensively.

Does Heckscher-Ohlin explain actual trade patterns?

Despite its plausibility, the Heckscher-Ohlin theory is frequently at variance with the actual patterns of international trade.