The country of Dalima has long been a substantial exporter of seafood, reflecting its unusual abundance of coastal waters; in contrast, its continental neighbor, Bundeeza, has excelled in the export of goods produced in labor-intensive manufacturing industries. Based on this information, the export policies of the two countries is best explained by
A) mercantilism.
B) theory of absolute advantage.
C) Heckscher-Ohlin theory.
D) theory of comparative advantage.
E) Samuelson's critique.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin theory explains that countries will export goods that utilize their abundant and cheap factors of production. Dalima exports seafood due to its abundant coastal waters, while Bundeeza exports labor-intensive goods due to its labor resources.

The Country of Dalima Has Long Been a Substantial Exporter