The ________ theory states that countries produce and export goods that require resources that are abundant, and import goods that require resources in short supply.

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The factor proportions theory, also known as the Heckscher-Ohlin theory, explains the pattern of international trade based on factor endowments. It suggests that countries will specialize in and export goods that require factors of production that are locally abundant, and import goods that require factors of production that are locally scarce. Thus, trade is determined by differences in the factor endowments of countries.

The ________ Theory States That Countries Produce and Export Goods