The Hechscher-Ohlin theory of comparative advantage

International economic is in countries with an economically middle interdependence research applied economics specialty. Many well-known economics pundit such as Adam Smiths, David Ricardo, John Stuart Mill, Alfred Marshall, John Maynard Keynes, and Paul A. Samuelson and Eli Heckscher, Bertil Ohlin. Many economists sent out different model to predict international trade exchange fabric and analyst affected of business policies, for examples like tariff policy, trading policy or exchange currency policy for each national economy. The success factors essential to pertain to of a product phyla already to well-known scientists the world approached in theoretical model about value string comparative advantage, country competitive advantage. In this paper, I will dig deeper in this Hechscher-Ohlin Model as an origin of ideas, the theory of interregional exchange and trade Ohlin. According to E.Heckscher (1949), “First developed by Eli Heckscher (1879-1952) and later developed by fellow Swedish economist Bertil Ohlin (1899-1979) in 1933, Heckscher-Ohlin trade theory is a theory to explain the existence and pattern of international trade based on a comparative cost advantage between countries producing different goods. Heckscher and Ohlin state that this advantage exists because of the relative resource endowments of the countries trading.(E.Hechscher).
According to Turan Subasat (2008), “ The Heckscher-Ohlin theory of comparative advantage was produced as an alternative to the Ricardian model and had an ideological mission: the elimination of the labor theory of value and the incorporation of the neoclassical price mechanism into international trade theory. This article first questions the empirical validity of the Heckscher-Ohlin model and argues that most of the empirical work aimed at proving the validity of the model by focusing on its power to predict trade patterns is irrelevant.”

There are theories of international trade and models of economy but the Ricardo model in which Comparative advantage research centralized Ricardo model, a concept is accounted that been most important in theoretically international trade. Model Heckscher- Ohlin is built stands for basic model about comparative advantage of Ricardo. Although it is more sophisticated and correctly presumptive able, it still has idealization. To dropping the value of the labor theory and append Neoclassicism mechanism to international trade theory. Model Hechscher- Ohlin reason international trade fabric is decide by force source elements middle disparity. It predicts that a country will take advantage of production and exports upon its nation available resources and imports in using many its factors in that country has less. According to Richard, “ Bertil Ohlin’s formal contribution to economics, as it appears in his English languages writings of the memoirs is dominated by the model of international trade which he developed and elaborated on the basic of earlier insights of Eli Hechscher.” In fact, while Ohlin attended at Stockholm on the fall 1920, he have influenced and absorbed by Heckscher international trade ideas. Later 1920, Ohlin have combines the both ideas from his professor in Berlin, Mr. Gustav Cassel in which express neoclassical general equilibrium for a single economy and Heckscher, a neoclassical international trade theory. To become of one perfectly idea from Ohlin promoted that international equilibrium with two trading countries should be extended from Cassel ‘ idea where he got a main reason from Heckscher trade theorem. First, The Heckscher-Ohlin theorem is one of the four critical theorems of the Heckscher-Ohlin model. It states: “ A capital-abundant country will export the capital-intensive good, while the labor-abundant country will export-intensive good. The critical assumption of the model Heckscher-Ohlin model is that the two countries are identical, except for the difference in resource endowments.” Second, it mentions to factor- price equalization in which an approach ensuring postulate. Heckscher-Ohlin model about international trade consider wherewith a number of assumption is limitative, a free commerce is prefect replacement give production factor to move and will work acquaintance level leveling give evenness to any of a production factors on a world scale, for example such as wage level of all of country rights. Favorably about competing price-foundation give commence word to businesslike objective. This theory about competitive advantage: as for example rank two double-side countries, meridian reached profit when products a exporting country land has more love competitiveness price be in country than oversea when bandy commercially with respected to another country that has inland higher oversea competitive price. Namely what competitive advantage: have two theoretically about competitive advantage, there is a recently theory and the David Ricardo traditional theory that economist Scandinavian theory, Heckscher and Ohlin. Both people equilateral that base upon a series of pustules is thereinafter illustrative.
Comparative advantage is a comparison concept economically among product expense ratio of goods A of country X conjugate world’s average cost, with product expense ratio if goods B of country X world’s average cost division. Author of the comparative advantages (Ricardo, Heckscher, Ohlin, Samuelson) proved each country there will benefit from product kind in production specialization concernment that those country has comparative advantage. Preach reasoning of global commerce evidence” comparative advantage” later that was practically audited calculated rightly and used made underpinning. As many this years, world organizers as IMF, WB use this indicator as computing services, make underpinning that give product phyla for developing countries and as a encouraging countries to develop its policy. Finally, this is a model as a combined from other ideas as an assumption of perfect competition in all markets.