Which theory suggests that countries with large, low-cost endowments of a factor of production will attract firms needing that factor of production?
A) national competitive advantage theory
B) Heckscher-Ohlin theory
C) country similarity theory
D) absolute advantage theory

Question

Quizplus · Accepted Answer

The Heckscher-Ohlin theory suggests that countries will export products that utilize their abundant and cheap factors of production and import products that require factors of production that are rare and expensive domestically. This theory explains how countries attract firms needing specific factors of production that are abundantly available and cost-effective within their borders.

Which Theory Suggests That Countries with Large, Low-Cost Endowments of a Factor