According to the factor endowment model of Heckscher and Ohlin, countries heavily endowed with land will:
Options:
a. Devote excessive amounts of resources to agricultural production. b. Devote insufficient amounts of resources to agricultural production. c. Export products that are land-intensive. d. Import products that are land-intensive. |
The Correct Answer Is:
c. Export products that are land-intensive.
Heckscher-Ohlin Model: The Role of Land Endowment
The Heckscher-Ohlin model, formulated by economists Eli Heckscher and Bertil Ohlin, provides insights into international trade patterns based on a country’s factor endowments.
According to this model, countries endowed with abundant land resources will specialize in and export goods that are intensive in land usage. The correct option among the provided choices is “c. Export products that are land-intensive.”
Explanation of the Correct Answer:
c. Export Products that are Land-Intensive
In the Heckscher-Ohlin model, factor endowments refer to a country’s relative abundance of factors of production, such as land, labor, and capital. When a country is heavily endowed with land, it means that it has a relatively large supply of this factor compared to other countries.
In this scenario, the country is inclined to specialize in the production of goods that make extensive use of land as a primary input.
Due to their abundance of land, such countries can produce land-intensive goods more efficiently and at a lower cost compared to countries with limited land resources. As a result, they will export these land-intensive products to international markets.
This specialization and export of land-intensive goods align with the predictions of the Heckscher-Ohlin model, which asserts that countries will export goods that use their abundant factors of production more intensively.
Explanation of Incorrect Options:
a. Devote Excessive Amounts of Resources to Agricultural Production
This option suggests that countries heavily endowed with land will allocate an excessive amount of resources to agricultural production. However, this statement does not accurately reflect the predictions of the Heckscher-Ohlin model.
While countries rich in land resources are likely to have a comparative advantage in agricultural production, it does not imply an excessive allocation of resources. Instead, it means that they can produce agricultural goods more efficiently and competitively.
b. Devote Insufficient Amounts of Resources to Agricultural Production
This option implies that countries with abundant land will underinvest in agricultural production. This contradicts the predictions of the Heckscher-Ohlin model.
In fact, countries with abundant land resources are more likely to specialize in and excel at agricultural production due to their comparative advantage in this sector. Therefore, they would devote sufficient resources to capitalize on this advantage.
d. Import Products that are Land-Intensive
This option suggests that countries with abundant land resources would import products that heavily rely on land as an input.
However, according to the Heckscher-Ohlin model, countries with abundant land are expected to specialize in and export land-intensive products, rather than importing them. This is because they have a comparative advantage in producing such goods.
In line with the Heckscher-Ohlin model, countries endowed with ample land resources are likely to specialize in and export products that heavily rely on land as a factor of production. This is due to their comparative advantage in efficiently producing land-intensive goods.
The other options provided do not align with the predictions of the Heckscher-Ohlin model and are therefore not accurate representations of the relationship between land endowment and trade patterns.
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