Which theory suggests that factor (resource) endowments determine a nation's comparative advantage?
A) the Linder theory
B) the product life cycle theory
C) the MacDougall theory
D) the Heckscher-Ohlin theory

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin theory suggests that factor (resource) endowments determine a nation's comparative advantage in production and trade. This theory states that countries will export goods that make intensive use of factors that are locally abundant, while importing goods that make intensive use of factors that are locally scarce. In the case of the market for gasoline in a small nation, the Heckscher-Ohlin theory would suggest that the nation would export gasoline, if it has abundant natural resources and capital, and import other goods that require different factors of production.

Which Theory Suggests That Factor (Resource) Endowments Determine a Nation's