Economics • Economic BasicsMedium
In the context of international trade theory, what does the Heckscher-Ohlin model primarily attribute comparative advantage to?
A. Differences in labor productivity resulting from technological innovations
B. Variations in national factor endowments such as labor and capital abundance✓ Correct Answer
C. Government subsidies and export promotion tariffs
D. Monopolistic competition in domestic industrial markets
💡 Solution & Explanation
The Heckscher-Ohlin theorem posits that countries export products that utilize their abundant and cheap production factors intensively while importing goods requiring scarce factors. This contrasts with the Ricardian model, which relies solely on labor productivity differences. Factor endowment proportions dictate international trade patterns under this framework.
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