Submitted by ahsunali on September 27, 2007

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Hersher-Ohlin Model

EC 351: INTERNATIONAL TRADE Turab Hussain


THE HECKSCHER-OHLIN MODEL


Introduction


- Developed by two Swedish economists, Eli Heckscher and Bertil Ohlin between 1919-24. It is also called the Factor-Proportion model.

- In the model resource differences are the only source of trade and shows that comparative advantage is influenced by two basic characteristics of countries and products:


1. Countries differ from each other according to the factors of production they possess (relative factor abundance).


2. Goods differ from each other...

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