The correct answer is D. Eli Heckscher and Bertil Ohlin. The Factor Endowment Model, often referred to as the Heckscher-Ohlin Model, is a fundamental theory in international trade that was developed by these two economists.

The model provides valuable insights into the determinants of comparative advantage and the patterns of trade between nations. Now, let’s delve into the details of why the answer is correct and why the other options are not.

D. Eli Heckscher and Bertil Ohlin (Correct Answer):

Eli Heckscher, a Swedish economist, and his student Bertil Ohlin, also a Swedish economist, collaborated to develop the Factor Endowment Model, which later became known as the Heckscher-Ohlin Model.

This model explains why countries specialize in the production and export of goods that use their abundant factors of production (such as labor, capital, and land) and import goods that require the factors they lack.

The Heckscher-Ohlin Model is a key theory in international economics and provides a comprehensive framework for understanding the basis of international trade. It argues that differences in factor endowments (the quantities of productive resources a country possesses) determine a country’s comparative advantage and influence its trade patterns.

A. Adam Smith:

While Adam Smith made significant contributions to the field of economics, particularly with his work “The Wealth of Nations,” the Factor Endowment Model was not developed by him.

Adam Smith is most famously associated with the theory of absolute advantage, which focuses on a country’s ability to produce a good more efficiently than other nations, as opposed to the Heckscher-Ohlin Model, which centers on the relative abundance of factors of production as the driver of comparative advantage.

B. David Ricardo:

David Ricardo, another renowned economist, introduced the theory of comparative advantage, which is distinct from the Heckscher-Ohlin Model. Comparative advantage focuses on a country’s ability to produce a good at a lower opportunity cost than other goods it could produce, rather than the factor endowments as emphasized in the Heckscher-Ohlin Model.

While Ricardo’s theory is a fundamental concept in international trade, it is different from the specific model developed by Heckscher and Ohlin.

C. John Stuart Mill:

John Stuart Mill, a prominent economist and philosopher, contributed to the field of economics with his work “Principles of Political Economy.” However, he did not develop the Factor Endowment Model or the Heckscher-Ohlin Model.

Mill’s contributions to economics encompass a wide range of topics, including utilitarianism and the theory of value, but he is not associated with the particular model in question.

In summary, the Factor Endowment Model of international trade, also known as the Heckscher-Ohlin Model, was indeed developed by Eli Heckscher and Bertil Ohlin. This model offers a comprehensive explanation of the determinants of comparative advantage and trade patterns between countries based on their factor endowments.

While Adam Smith, David Ricardo, and John Stuart Mill made significant contributions to the field of economics, they did not develop the Heckscher-Ohlin Model, which is a distinct and fundamental theory in international trade. The Heckscher-Ohlin Model continues to be a cornerstone in the study of international trade and is widely used to analyze global trade patterns and trade policy decisions.