Question

. Discuss the statement "No country is abundant in everything." from the perspective of the Heckscher-Ohlin Model.

Answer 1

H-O model states that no country is abundant in everything. This means that a single country does not have all the resources and factors of production to produce everything it needs, and even if it does, it cannot produce everything efficiently. One country might have labor abundance, others might have an abundance of land, and another one might have advanced technology, but not a single country can have an abundance of every resource or factor of production. Thus, each country will produce and export those goods whose factors of production or resources it has in abundance. That means a county will labor abundance will export labor-intensive goods and the country with advanced technology will export goods that it are technology-oriented.

In this way, each country produces and exports only those goods whose factors of production they have in abundance and it leads to efficiency in production, efficiency in trade, and global welfare.