The factor-proportions theory predicts that the pattern of trade is determined mostly by country differences in factor endowments.

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The factor-proportions theory, also known as the Heckscher-Ohlin theory, suggests that countries will export goods that require resources (factors of production) that are relatively abundant and import goods that require resources that are relatively scarce. This means the pattern of trade is indeed determined by differences in countries' factor endowments.

The Factor-Proportions Theory Predicts That the Pattern of Trade Is