The Heckscher-Ohlin model of trade, proposed by two Swedish economists Hecksher and Ohlin, is based on the differences of factor requirements in commodities and difference in relative factor endowments. It believes that these factors explain the cause of trade. According to the Heckscher-Ohlin theory, it predicts that countries will export those goods that make intensive use of factors of production, which are locally abundant, while importing goods that make intensive use of factors that are …
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showed last 75 words of 1369 total
…with different factor endowments. It is important to note however, that in order to develop and improve trade theories, one must work on establishing a better theory of how new technologies and new knowledge in general, arises. REFERENCES: 1) Appelyard, D.R and Field, A.J, 2nd Edition, International Economics, Irwin. 2) Lindert, P (1996), 10th Edition, International Economics, Irwin. 3) Salvatore D, 5th Edition, International Economics, Prentice Hall. 4) Walther, T. (1997), The World of Economy, John Wiley & Sons, Inc.