Heckscher-Ohlin Model
Categories: Financial Theory
The Heckscher-Ohlin model, or the H-O model, is an economic theory that countries export goods and services that are the produced in the highest quantity, and are produced efficiently. Likewise, this implies that nations import what’s hard for them to make, and what they don’t have that they want.
For instance, France exports a lot of wine, which it produces a lot of, and does so efficiently (and amazingly). And the rest of us buy it.
The H-O model allows macroeconomists to study and measure the balance of trade of specific goods and resources between any two countries, or groups of countries.