Heckscher-Ohlin theory
In economics, a theory of comparative advantage in international trade according to which countries in which capital is relatively plentiful and labour relatively scarce will tend to export capital-intensive products and import labour-intensive products, while countries in which labour is relatively plentiful and capital relatively scarce will tend to export labour-intensive products and import capital-intensive products. The theory was developed by the Swedish economist Bertil Ohlin (1899–1979) on the basis of work by his teacher the Swedish economist Eli Filip Heckscher (1879–1952). For his work on the theory, Ohlin was awarded the Nobel Prize for Economics (the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel) in 1977. (Encyclopedia Britannica, 2020)
Сonsists of four principal theorems, viz. the Heckscher–Ohlin trade theorem whereby relatively capital abundant countries export relatively capital intensive commodities, the factor-price equalization theorem whereby trade in goods may serve to equalize wage rates between countries, the Stolper–Samuelson theorem whereby an increase in the price of the relatively labour-intensive commodity unambiguously improves the real wage rate, and the Rybczynski theorem stating that an increase in capital endowment by itself must cause some output to fall if prices are held constant. (Jones & Cornell University, 2008)
Encyclopedia Britannica. (2020, June 16). Heckscher-Ohlin theory | Definition, Examples, & Leontief Paradox. Retrieved from https://www.britannica.com/money/topic/Heckscher-Ohlin-theory
Jones, R. W. & Cornell University. (2008). Heckscher–Ohlin trade theory. Palgrave Macmillan UK eBooks, 1. https://doi.org/10.1057/978-1-349-95121-5_1116-2