If trade is consistent with the H-O theory, then growth in a country's scarce factor of production will lead to:

Question

Quizplus · Accepted Answer

According to the Heckscher-Ohlin (H-O) theory, a country will export goods that make intensive use of its abundant factors of production and import goods that make intensive use of its scarce factors. If the scarce factor of production in a country grows, the country becomes relatively more self-sufficient in the goods that use this factor intensively, reducing the need to import these goods. This leads to a decreased willingness to trade.

If Trade Is Consistent with the H-O Theory, Then Growth