## Heckscher–Ohlin trade theory

From The New Palgrave Dictionary of Economics, Second Edition, 2008

Edited by
Steven
N.
Durlauf
and
Lawrence
E.
Blume

Alternate versions available:
1987 Edition

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### Abstract

Heckscher–Ohlin trade theory consists of four principal theorems, viz. the Heckscher–Ohlin trade theorem whereby relatively capital-abundant countries export relatively capital-intensive commodities, the factor-price equalization theorem whereby trade in goods may serve to equalize wage rates between countries, the Stolper–Samuelson theorem whereby an increase in the price of the relatively labour-intensive commodity unambiguously improves the real wage rate, and the Rybczynski theorem stating that an increase in capital endowment by itself must cause some output to fall if prices are held constant. The article discusses the nature and fate of these theorems.

### Keywords

autarky; comparative advantage; dimensionality; distribution of income; factor-intensity reversal; factor-price equalization theorem; free trade; general equilibrium; Heckscher–Ohlin theorem; Hecksher–Ohlin trade theory; international trade theory; labour–capital ratio; Leontief paradox; Metzler tariff paradox; new trade theory; reciprocity relationship; relative factor abundance; relative factor intensity; Rybczynski theorem; specialization; Stolper–Samuelson theorem; tariffs; terms of trade

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### See Also

### How to cite this article

Jones, Ronald W. "Heckscher–Ohlin trade theory." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 19 February 2017 <http://www.dictionaryofeconomics.com/article?id=pde2008_H000034> doi:10.1057/9780230226203.0718