What is the Heckscher-Ohlin theorem?
The Heckscher-Ohlin theorem posits that nations will export goods that intensively use their relatively abundant and cheap factors of production and import goods that intensively use their relatively scarce and expensive factors. For instance, a country rich in labor would export labor-intensive goods, while a country rich in capital would export capital-intensive goods. This provides a fundamental explanation for the patterns of international trade observed in the real world.
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