Microeconomics



Microeconomics

How does the Heckscher-Ohlin theory differ from Ricardian theory in explaining international trade patterns?

The Heckscher- Ohlin Model of Trade is a mathematical model that operates in general equilibrium in the international trade. This model was developed by Eli Heckscher and Bertil Ohlin. This model followed the theory of comparative advantage which originated from David Ricardo's concept. According to this model the nations that export goods utilize the factors that are present in abundance and these factors are related to production and import goods that are utilized by the scarce factors in the nation. The Ricardian theory of comparative advantage in ...