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Modern theory of factor endowment heckscher ohilin theory
The document summarizes the Heckscher-Ohlin theory of international trade. The theory was developed by Swedish economists Eli Heckscher and Bertil Ohlin and proposes that countries will export goods that make intensive use of their abundant and cheap production factors, and import goods that make intensive use of their scarce and expensive factors. For example, a labor-abundant country will export labor-intensive goods and import capital-intensive goods. The theory is based on assumptions including two countries, two goods, two factors of production, identical technologies, and the absence of trade barriers. It predicts that capital-abundant countries will specialize in and export capital-intensive goods, while labor-abundant countries will specialize
