Knowra Heckscher–Ohlin theorem Heckscher–Ohlin theorem A trade theory predicting that countries export goods using their relatively abundant factors of production intensively and import goods using their scarce factors.
Factor endowment : The quantities of land, labor, capital, and other productive resources available to an economy. Differences in national factor supplies generate the theorem’s prediction about trade.
Comparative advantage : The ability to produce a good at a lower opportunity cost than another producer. The theorem supplies one account of why countries have different comparative advantages.
Leontief input-output analysis : A method that traces how industries use inputs from other industries to produce output. It estimated the labor and capital embodied in traded goods for the paradox test.
Ricardian model : A trade model explaining comparative advantage through cross-country differences in labor productivity. It attributes trade to technology differences rather than relative factor abundance.
Trade and income distribution : The study of how international trade changes incomes across workers, owners, and other groups. The theorem’s factor-based logic predicts which groups gain or lose from trade.
Factor intensity : The relative amounts of production factors used to make a good. A good is exported when it uses the country’s abundant factor intensively.
Production function : A mathematical relationship between productive inputs and the output they can produce. Production functions determine which factors each good uses intensively.
Human capital : The productive capacities gained through education, training, experience, and health. Counting skilled labor as a distinct factor can change apparent abundance rankings.
Specific-factors model : A trade model in which some production factors are tied to particular industries in the short run. It emphasizes sector-specific gains and losses rather than only national factor abundance.
Labor market effects of trade : Changes in employment, wages, and labor demand associated with international trade. Import competition and export demand can affect workers differently by skill and sector.
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