Question

Has does New Trade Theory extend the Heckscher-Ohlin model?

Answer 1

Yes new trade theories extend H-o theory. They point to need for new complementary trade theories to explain significant portion of world trade that H-o leaves unexplained

E. G both nations don't use same technology in H-o model But technology can be viewed as factor of production and is thus within realm of H-o theory. It does not cover increasing returns which are covered by new trade theory. Similarly it does explain intra industry trade But as Lancaster pointed out intra industry trade reflects acquired comparative advantage while inter industry trade reflects natural comparative advantage.