The export oc the product that embodies large amounts of the relatively cheap , abundant resources results in an increase in price and income, at the same time

Eduncle

Dear Indu,

Greetings!!

Answer:-

First, we will discuss the What Is the Heckscher-Ohlin Model?

The primary work behind the Heckscher-Ohlin model was a 1919 Swedish paper written by Eli Heckscher at the Stockholm School of Economics. His student, Bertil Ohlin, added to it in 1933.

The Heckscher-Ohlin model is an economic theory that proposes that countries export what they can most efficiently and plentifully produce. Also referred to as the H-O model or 2x2x2 model, it's used to evaluate trade and, more specifically, the equilibrium of trade between two countries that have varying specialties and natural resources.

The model emphasizes the export of goods requiring factors of production that a country has in abundance. It also emphasizes the import of goods that a nation cannot produce as efficiently. It takes the position that countries should ideally export materials and resources of which they have an excess, while proportionately importing those resources they need.

1. The Heckscher-Ohlin model evaluates the equilibrium of trade between two countries that have varying specialties and natural resources.

2. The model explains how a nation should operate and trade when resources are imbalanced throughout the world.

3. The model isn't limited to commodities, but also incorporates other production factors such as labor.

4. The model emphasizes the benefits of international trade and the global benefits to everyone when each country puts the most effort into exporting resources that are domestically naturally abundant.

5. All countries benefit when they import the resources they naturally lack. Because a nation does not have to rely solely on internal markets, it can take advantage of elastic demand.

6. The cost of labor increases and marginal productivity declines as more countries and emerging markets develop. Trading internationally allows countries to adjust to capital-intensive goods production, which would not be possible if each country only sold goods internally.

Thank You for asking your query