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What is the assertion of the Heckscher-Ohlin (HO) Model? What are its implications for the income...

  1. What is the assertion of the Heckscher-Ohlin (HO) Model? What are its implications for the income distribution effects of trade? Be sure to address each point in the question and explain your argument carefully. (5 points each)
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Answer #1

An increase in a country's labor supply will increase production of the labor-intensive good and decrease production of the capital-intensive good. This is the assertion of the Heckscher-Ohlin (HO) Model.

Trade facilitation has an impact on income distribution and poverty in developing countries through its effects on international trade, economic growth and government revenue. Trade facilitation may increase employment which may help some move out of poverty.

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