Tag Archives: Theory

Ricardian Theory of Trade

By | May 29, 2017

The Ricardian theory of trade focuses on the comparative advantage of the nation. According to the Ricardian theory of trade, comparative advantage determines the pattern of trade. Ricardo asserted that even if a nation does not possess an absolute advantage,  there are changes of gains through trade among the nations by comparative advantage. The Ricardian theory is based on… Read More »

Hecksher Ohlin Samuelson Theory

By | April 26, 2017

The Heckscher-Ohlin-Samuelson (HOS) theorem states that a country which is relatively abundant in labor will have a comparative advantage in the labor-intensive good and the relatively capital abundant country will have a comparative advantage in the capital-intensive good. Thus, it is the factor abundance rather than technology which determines the pattern of trade. The Heckscher-Ohlin theorem predicts the pattern of trade between countries… Read More »