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SOUTHEAST UNIVERSITY

HECKSCHER-OHLIN MODEL

Submitted to: Prof.Dr.Mohammed Ali Rashid Dean School of Arts & Social Science

Submitted by: Faria HossainLisa Batch-17 Id no: 2013020106023
Course code: ECO 3233
Course Title: International Economics

HECKSCHER-OHLIN MODEL
A country shouldn’t produce the entire product because there will be an “inefficient allocation of resources”. Trade is needed because of “efficient resource allocation”. The entire nation has the main goal to increase GDP or per capita income because to increase “standard of living”. It only can possible with the proper use of resources. Income or output increased by the proper use of resources.
So the differences between nation’s resources are the main source of trade. By Richardian model we can know that comparative advantage only can happen because of international differences in labor productivity. But in real world we can see that international differences between resources are the main source of trade. This is explained by Swedish economist Eli Heckscher and Bertil ohlin.This model shows that by the interaction between nation resources (the relative abundance of factors of production) and the technology production (which influences the relative intensity with which different factor of production are used in the production of different goods). This theory is often reffered to as the heckscher-ohlin model.It is also reffered as the factor-proportion theory.
The original H–O model assumed that the only difference between countries was the

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