Suppose that all countries eliminate their barriers to trade.
The HeckscherOhlin model predicts that:
A)wages should become more equal throughout the world.
B)wages should become more unequal throughout the world.
C)the volume of international trade should fall.
D)there should be increased migration of labor among countries.

Question

Suppose that all countries eliminate their barriers to trade.
The Heckscher­Ohlin model predicts that:
A)wages should become more equal throughout the world.
B)wages should become more unequal throughout the world.
C)the volume of international trade should fall.
D)there should be increased migration of labor among countries.

Quizplus · Accepted Answer

According to the Heckscher­Ohlin model, the elimination of trade barriers should lead to an increase in trade between countries based on their comparative advantages in production. This increased trade should lead to a convergence of factor prices, which in turn should lead to more equal wages throughout the world.

Suppose That All Countries Eliminate Their Barriers to Trade