Factor Proportions Theory Paper

Factor Proportions Theory suggests that a country’s comparative advantage in producing certain goods depends on its relative abundance of production factors—such as labor, capital, or land. Countries will tend to export products that use their abundant resources more intensively, and import those that require resources they have in limited supply. This explains international trade patterns based on differences in resource availability, highlighting that the key to trade benefits lies in how nations' factor endowments shape their production choices.