EBK MACROECONOMICS
5th Edition
ISBN: 8220106773925
Author: KRUGMAN
Publisher: MAC HIGHER
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Chapter 5, Problem 3P
To determine
Concept Introduction:
Heckscher-Ohlin Model:
- It is the model of international trade based on
comparative advantage principle. It is also called H-O model. According to H.O model, the country has a comparative advantage in the production of those goods whose factors of productions are abundantly available. It means that the abundant factor has large use in the production of goods. - It specifies that international trade increase the wage of labors which are intensively used in the production. Take an example America is capital-intensive nation, export of capital increases the wages of skilled labor.
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