First of all its necessary to consider Hecksher and Ohlin theory - Essay Example

Only on StudentShare

Extract of sample
First of all its necessary to consider Hecksher and Ohlin theory

Countries have comparative advantage in those goods for which the required factors of production are relatively abundant. This is because the prices of goods are ultimately determined by the prices of their inputs. Goods that require inputs that are locally abundant will be cheaper to produce than those goods that require inputs that are locally scarce.
For example, a country where capital and land are abundant but labor is scarce will have comparative advantage in goods that require lots of capital and land, but little labor - grains, for example. Since capital and land are abundant, their prices will be low. Those low prices will ensure that the price of the grain that they are used to produce will also be low - and thus attractive for both local consumption and export. Labor intensive goods on the other hand will be very expensive to produce since labor is scarce and its price is high. Therefore, the country is better off importing those goo
The Ricardian model of comparative advantage has trade ultimately motivated by differences in labour productivity using different technologies. Heckscher and Ohlin didn't require production technology to vary between countries, so (in the interests of simplicity) the H-O model has identical production technology everywhere. ...Show more

Summary

The Heckscher-Ohlin model 1(H-O model) is a general equilibrium mathematical model of international trade, developed by Eli Heckscher and Bertil Ohlin at the Stockholm School of Economics. It builds on David Ricardo's theory of comparative advantage by predicting patterns of trade and production based on the factor endowments of a trading region…
Author : chadd27
Save Your Time for More Important Things
Let us write a custom essay on your topic
"First of all its necessary to consider Hecksher and Ohlin theory"
with a personal 20% discount.
Find out more

Related Essays

Not all security experts agree about the value of biometrics. Using the Internet research the topic of biometrics. What are its advantages and disadvantages Wh
1 pages (250 words) Math Problem
evaluate a chosen psychological theory and its associated method of intervention with regaurd to a chosen mental disorder.Further consider the factors that affe
An essential ingredient of psychodynamics is to focus on the relationship between the dynamism of emotional states in the id, ego and superego in relation to the early childhood development and corresponding mental processes. Psychodynamics endeavours in explaining or interpreting behaviour or mental conditions in terms of instinctive emotional forces.
9 pages (2250 words) Essay
Are reason and emotion equally necessary in justifying moral decisions Theory of Knowledge Essay
To make a basic distinction, reason is a faculty of awareness which attempts "to perceive that which exists by organizing observational data" whereas emotion a faculty of reaction to one's perception which has "has no power of observation and no volition; it has no means of independent access to reality, no means to guide its own course, and no capacity to monitor its own relationship to facts" (Objectivist Philosophy.
6 pages (1500 words) Essay
The Hecksher Ohlin Theory
In other words, the theory of comparative advantage assumes a single factor of production - labor - and describes a situation in which trade takes place between countries having different technologies, i.e., countries operating at different levels of efficiency, and therefore having certain comparative advantages.
6 pages (1500 words) Essay
Necessary Leadership Alberto Fujimori
Such unilateral actions are the antithesis of democracy; however, given the problems that Peru faced in the early 1990s, they were appropriate measures. Had Fujimori not taken these steps, the Peruvian economy would probably still be suffering and the country would be controlled by terrorist organizations.
8 pages (2000 words) Essay
1.For any theory of law, justice or rights to be worthy of our support, it must involve a necessary connection with morality. To what extent, if at all, do you agree with this view?
g of this aspect – yet it is a phenomenon as to how we follow these rules, penalise those who do not follow the rules, and indeed possibly take them for granted. Why is this? This essay will explore whether the reason we accept and obey laws is based on, or must have a
16 pages (4000 words) Essay
Political Organization
The objectives of organizational politics usually aim for progress, but as to the methods used, it might be viewed differently with
1 pages (250 words) Essay
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT