The Heckscher-Ohlin Hypothesis
The notion that a country’s comparative advantage (disadvantage) is determined by the relative abundance (scarcity) of factors of production was first mooted by Eli Heckscher in an article1 published in 1919 where he concluded the following:
difference in the relative scarcity of the factors of production between one country and another is thus a necessary condition for a difference in comparative costs and consequently for international trade. A further indispensable condition is that the proportions in which the factors of production are combined shall not be the same for one commodity or for another. (p. 278)
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