The Heckscher-Ohlin theory, like the earlier theories of trade, assumed that the techniques of production were given and fixed. Such an assumption can be valid only in a static system. In actual dynamic realities, there can be no place for such an assumption. The technical changes have highly significant effects on production and trade. A technological change may be expressed [...]
In this article we will discuss about the specific factor model of trade. Single Specific Factor Case: The Heckscher-Ohlin factor endowment theory was put into doubt by the Leontief Paradox. Another objection against the validity of the H-O theory was raised by Stephen Magee. An assumption has been taken in the H-O theory that the factors of production are perfectly [...]
In case of intra-industry trade models, it was assumed that the number of firms in the manufacturing sector in each country was large. There is another group of models in which the number of firms in the manufacturing sector is supposed to be small. Such models are termed as the oligopolistic models. The most significant element in the oligopolistic models [...]