Do the Heckscher-Ohlin Models Explain Global Trading Patterns?
An examination of the Heckscher-Ohlin model which tries to explain global trading patterns and factor price equalization.
This paper looks at the Heckscher-Ohlin Model as an example of global trading patterns and seeks an explanation for why the Leontief paradox occured and why it is that Factor price equalization does not seem to have occurred. It contains references to relevant American trading data as well as two detailed tables of international economics data.
“International trade is a logical and natural advance in the affairs of man. If one has a good to barter with then an optimal level of indifference between different goods can be achieved. However there is much debate about whether trade is due entirely to a relative abundance of supply of a particular factor or are there other reasons. Ever since Eli Heckscher, based on a hunch, unveiled his ideas on international trade theory, in 1919 it has been held, by some, as a satisfactory explanation of International Trade, however, is it really that clear cut? ”