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  • Main Ideas of Hecksher - Ohlin Theory Graphical and Analytical Interpretation-1

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    123 ArAkh
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    The Heckscher-Ohlin theory states that countries will export goods that rely more heavily on their abundant factors of production and import goods that rely more on scarce factors. The theory assumes two goods, two factors of production (capital and labor), perfectly competitive markets, and identical production functions. It uses a 2x2x2 model and factor intensity to graphically and analytically show how comparative advantage results in trade based on relative factor endowments between countries.

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    Ohlin theory graphical and analytical interpretation prezentation

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    Main ideas of Hecksher – Ohlin theory graphical and analytical interpretation-1

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    The Heckscher-Ohlin theory states that countries will export goods that rely more heavily on their abundant factors of production and import goods that rely more on scarce factors. The theory assumes two goods, two factors of production (capital and labor), perfectly competitive markets, and identical production functions. It uses a 2x2x2 model and factor intensity to graphically and analytically show how comparative advantage results in trade based on relative factor endowments between countries.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    16 views12 pages

    Main Ideas of Hecksher - Ohlin Theory Graphical and Analytical Interpretation-1

    Uploaded by

    123 ArAkh
    The Heckscher-Ohlin theory states that countries will export goods that rely more heavily on their abundant factors of production and import goods that rely more on scarce factors. The theory assumes two goods, two factors of production (capital and labor), perfectly competitive markets, and identical production functions. It uses a 2x2x2 model and factor intensity to graphically and analytically show how comparative advantage results in trade based on relative factor endowments between countries.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 12

    Main ideas of

    Hecksher – Ohlin theory:

    graphical and analytical

    interpretation
    Content: 1) What Is the Heckscher-Ohlin Theory?
    2) The main ideas of the theory
    3) The main assumptions of the theorem
    4)Graphical interpretation
    5)Heckscher Ohlin Model Comparative
    Advantage
    6)Heckscher Ohlin Model Criticism
    7) Conclusion
    What Is the Heckscher-
    Ohlin Theory?
    The main ideas of the theory
    The main assumptions of the theorem

    Factor intensity of individual products Factor intensity of countries


    Factor intensive

    Labour intensive Capital intensive

    L2/K2>L1/K1 K2/L2>K1/L1

    *K-capital
    L-labour
    2×2×2 Model

    export

    import
    export
    import
    Heckscher Ohlin Model

    Comparative Advantage

    capital as a
    productivity long-run technology
    factor of

    production
    Heckscher Ohlin Model Criticism

    TRANSPORTATION
    QUALITY
    COSTS

    MIGRATION TECHNOLOGY
    CONCLUSION
    theory explanation
    analytical/competitive
    interpretation

    graphical
    interpretation
    THANK YOU!

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