Question

The H.O, theory predicts countries don't in fact export the goods. Do you agree?

Answer 1

H.O. Theory of international trade proposes that countries should produce that goods and services for whom, factors of production are in abundance, get specialized in that specific goods and export to the other nations by doing international trade. So, I do not agree with the statement that H.O. theory predicting countries not making exports. Rather, it can be said that it is the HO theory that makes countries find a way or method to become specialized in production, based on factors of production available to them. It makes the nations to be more efficient and productivity increases. As a result, after international trade, consumption possibility curve moves out of the PPF curve and country can consumer a bigger and better combination of goods after international trade.

Therefore, I do not agree with the statement and H.O. theory is wrongly interpreted by the statement.