Question

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

Answer 1

Ans-

This concept is related to the theory of Hecksher Ohlin Model and talks about factor abundance. It is a relative concept. According to this concept, none of the country is abundant in everything i.e.excess in everything. Some countries have some things in excess and some other things are less.

When we consider country A, having excess capital,known as capital abundant. It means it has excess capital per labour than another country,

Then it is rarely possible that it has same excess units of labour for per unit of capital. It means this country is considered as capital abundant rather than labour abudent because there are less units of labour as compared to capital.

Consider another country B, which have less capital and excess labour. It means units of labour are more than capital and is labour abundant.

It means each country has different specialisation and by using that specialisation, they get trade benefits in international trades.

Country ( A) produces and exports that commodity which requires excess capital and country (B) produces and exports that commodity which requires excess labour units.