China has 20% of the world's population but only 10% of the world's farmable land. Which of the following will be predicted by the Heckscher-Ohlin theory, if China begins to trade with other countries?
A)China will export land-intensive goods like wheat and import labor-intensive goods like clothing.
B)China will shift resources into the production of agricultural goods and away from manufactured goods.
C)China will shift resources from the production of agricultural goods to the production of labor-intensive goods.
D)China will export capital-intensive goods like automobiles and import labor-intensive goods like clothing.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin theory predicts that countries will export goods that utilize their abundant factors of production and import goods that utilize their scarce factors. Since China has a large population (abundant labor) and relatively little farmable land (scarce land), it is predicted to shift resources to produce and export labor-intensive goods, rather than land-intensive agricultural goods.

China Has 20% of the World's Population but Only 10