Heckscher-Ohlin Model

The Heckscher-Ohlin Model is an economic theory that explains international trade by focusing on a country's resources. It suggests that countries will export goods that use their abundant resources efficiently and import goods that require resources they lack. For example, a country rich in labor may export labor-intensive products like textiles, while a resource-rich country may export raw materials. This model highlights how differences in factor endowments—like land, labor, and capital—drive global trade patterns, indicating that trade can benefit countries by allowing them to specialize according to their strengths.