Question

What were the results of empirical tests on the relationship between human capital and international trade? Natural resources and international trade? What is the status of the H–O theory today?

Answer 1

Answer:

Heckscher-Ohlin theory is known as modern theory of international trade. It was first formulated by Swedish economist Heckscher in 1919 and later on fully developed by his student Ohlin in 1935. Heckscher-Ohlin theory, also called the factor endowments theory of international trade, attempts to explain that international trade is simply a special case of inter-local or inter-regional trade, and there is no need for a separate theory of international trade.

It emphasises that differences in factor endowments, and not differences in factor efficiency as maintained in the classical theory, are the true basis of international trade.

Explanation: