Which economic theory explains international trade patterns based on differences in national factor endowments such as labor and capital abundance?

💡 Solution & Explanation

The Heckscher-Ohlin model explains international trade patterns by focusing on national differences in factor endowments such as relative abundance of labor, land, and capital. Absolute and comparative advantage theories, by contrast, rely primarily on labor productivity differentials rather than factor proportions. According to this model, countries tend to export goods that intensively use their relatively abundant local factors.