Which theory explains why the low labor costs of Bangladesh have attracted toy, footwear, and textile manufacturers to develop manufacturing facilities in Bangladesh?
A) national competitive advantage theory
B) Heckscher-Ohlin theory
C) country similarity theory
D) absolute advantage theory

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin theory explains why countries trade goods and services based on their differing factor endowments. It suggests that countries will export products that utilize their abundant and cheap factors of production, and import products that require factors of production that are scarce or expensive domestically. Bangladesh's low labor costs make it an attractive location for labor-intensive manufacturing, such as toys, footwear, and textiles, according to this theory.

Which Theory Explains Why the Low Labor Costs of Bangladesh