The Augmented Heckschcr—Ohlin—Samuelson Model

Abstract

Despite its ‘twoness’ (that is, its 2 × 2 × 2 dimensions), the standard HOS model has been typically used in making fairly general statements about the open economy. However these general results are strongly dependent on the assumptions of the free and costless mobility of factors between sectors and their total lack of international mobility, assumptions that are clearly not plausible in the short run. Work on the consequences of a lack of internal factor mobility for the core propositions of the HOS model resumed about two decades ago. On the basis of contributions by Jones (1971), Samuelson (1971), Mayer (1974), Mussa (1974) and Neary (1978) the so-called specific-factors model emerged.¹ This model is examined in the next section.