Heckscher - Ohlin (H-O) theorem

(H-O theorem) "A capital abundant country will export the capital - intensive good, while the labor - abundant country will export the labor - intensive good." Exports A country exports those commodities produced with relatively large quantities of the country's relatively abundant factor. Factor Factor proportions model which links exports and imports to factor endowments. Explanation According to Heckscher - Ohlin, “a capital-abundant country will export the capital –intensive goods, while the labour-abundant country will export the labour-intensive goods”. A factor is regarded abundant or scare in relation to the quantum of other factors.

A country can be regarded as richly endowed with capital only if the ratio of capital to other factors is higher than other countries. Illustration Particulars India America