Factor Endowments, International Trade and Factor Prices*
IN the past few years, there has been a revival of interest in the Heckscher-Ohlin model of international trade, and a closer scrutiny of two propositions associated with its analysis of the principle of comparative costs.1 The first is that the cause of international trade is to be found largely in differences between the factor-endowments of different countries; the second that the effect of international trade is to tend to equalize factor prices as between countries, thus serving to some extent as a substitute for mobility of factors. The result, very briefly, has been to show that neither proposition is generally true, the validity of both depending on certain factual assumptions ...
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