The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Heckscher–Ohlin Trade Theory

  • Ronald W. Jones
Reference work entry


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.


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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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Ronald W. Jones
    • 1
  1. 1.