a Compare and contrast in your own words Ricardos theory of

(a) Compare and contrast in your own words, Ricardo\'s theory of Comparative Advantage and Hecksher-Ohlin theory. (6 marks)

Solution

Sl. No

Comparative Advantage

Heckler-Ohlin theory

1

Countries specialize in producing goods and services in which they have lower opportunity cost

Countries specialize in producing goods in which they have resources in abundance

2

It assumes labor as factor of production

Here it assumes that labor and capital as a factor of production

3

Technological difference is the major factor in achieving productivity

In long run countries would have same technology

Sl. No	Comparative Advantage	Heckler-Ohlin theory
1	Countries specialize in producing goods and services in which they have lower opportunity cost	Countries specialize in producing goods in which they have resources in abundance
2	It assumes labor as factor of production	Here it assumes that labor and capital as a factor of production
3	Technological difference is the major factor in achieving productivity	In long run countries would have same technology