Heckscher–Ohlin theorem

The Heckscher–Ohlin theorem is a fundamental concept in international trade theory that explains how countries engage in trade based on their factor endowments. It was developed by economists Eli Heckscher and Bertil Ohlin in the early 20th century. The theorem posits that: 1. **Factor Proportions**: Different countries have different relative supplies of factors of production, such as labor, land, and capital. These differences lead to variations in production costs and capacities.