Search 101,000 Essays
|
Have us write a custom essay for you!
|
Wordcount: 1033
|
Neo-classsical Theory
|
HOW DOES THE HECKSCHER-OHLIN MODEL EXPLAIN TRADE PATTERNS?
Two Swedish economists developed the Neo-Classical theory of international trade: Eli Heckscher (1919) and Bertil Ohlin (1933). It is known as the factor proposition (or endowment) theory, because it explains the commodity composition of trade, by analyzing the effects that factor endowments have on international trade. In other words, they explained the factors that determine which country exports what commodity.
The model makes a number of simplifying assumptions:
1. There are two countries, producing two commodities and two factors of production, labor and capital, whose initial levels are fixed and assumed to be relatively different for each country.
2. Technology is ide
|
This is only the first few lines of this paper. If you would like to view the entire paper you need to register here.
|
Get Instant Access to 100,000 Essays!!
|
|
|
|
