Part II: More General Equilibrium Models: Heckscher–Ohlin and Specific-Factor Models

The Ricardian model is especially simple in that production of commodities had a requirement of only a single factor of production, labor. The next major step in international trade theory was to allow more than a single factor, perhaps land, capital, or both, to join labor in theoretical attempts at explaining the wide variety in trade patterns among countries. Eli Heckscher in 1919 and one of his students in Sweden, Bertil Ohlin, in 1933, worked on what became known as the Heckscher–Ohlin model…