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What is Heckscher Ohlin Theorem?
The Heckscher Ohlin Theorem is actually one of the 4 vital theorems that belong to the Heckscher Ohlin model. According to this theory, a nation will export commodities which intensively make use of its abundant factors and also import commodities which intensively make use of its scarce factors.
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Know its importance
The Heckscher Ohlin Theorem assumes that two nations are similar apart from the variation in resource endowments. It also indicates that the aggregate preferences are similar. The relative capital abundance can lead a capital-abundant nation to manufacture capital-intensive commodities at a cheaper rate than a labor-abundant nation and vice versa.
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