The theory suggesting that the patterns of international trade are determined by factor endowment rather than productivity was propounded by which one of the following?

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UGC Paper 2: Commerce 22nd Dec 2018
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  1. Adam Smith
  2. David Ricardo
  3. Heckscher and Bertil Ohlin
  4. Michael Porter

Answer (Detailed Solution Below)

Option 3 : Heckscher and Bertil Ohlin
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The theory suggesting that the patterns of international trade are determined by factor endowment rather than productivity was propounded by Heckscher and Bertil Ohlin.

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Explanation:

  1. Heckscher-Ohlin theory, in economics, a theory of comparative advantage in international trade, according to which countries in which capital is relatively plentiful and labour relatively scarce will tend to export capital-intensive products and import labour-intensive products, while countries in which labour is relatively plentiful and capital relatively scarce will tend to export labor-intensive products and import capital-intensive products.
  2. The theory was developed by the Swedish economist Bertil Ohlin (1899–1979) on the basis of work by his teacher the Swedish economist Eli Filip Heckscher (1879–1952).
  3. For his work on the theory, Ohlin was awarded the Nobel Prize for Economics (the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel) in 1977.

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  1. Heckscher and Bertil Ohlin theorem - according to which trade should originate among nations that have different factor endowments.
  2. Adam Smith has given Absolute advantage theory.
  3. David Ricardo - comparative advantage
  4. Michael porter - porter’s national competitive advantage
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