Question

What are the major differences between the Ricardian Model and the H-O Model?

Answer 1

Following are the main difference between Ricardian and Heckscher Ohlin model of international trade-

A 1.first and foremost Ricardian theory which generally talks about two countries but consider only one factor whereas in the H-O model there is having two commodities and two factors

2. Ricardian theory talks about in terms of labour theory whereas the H-O model talks in terms of money

3. Ricardian theory generally used to find the gains from the trade but the H-O model tries to explain the basis of trade.

4. Ricardian theory considers labour efficiency into account whereas the H-O model considers factor supply.