If country A is relatively abundant in labor and country B is relatively abundant in capital, the Heckscher-Ohlin theory predicts that country A will export relatively labor-intensive goods and country B will export relatively capital-intensive goods.

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin theory explains that countries will export goods that use their abundant factors of production more intensively. Therefore, if country A is abundant in labor, it will export goods that use more labor, which are typically labor-intensive goods. Similarly, if country B is abundant in capital, it will export goods that use more capital, which are typically capital-intensive goods.

If Country a Is Relatively Abundant in Labor and Country