Final answer:
The Heckscher-Ohlin theory explains why a capital intensive country exports capital intensive products, relating to a country's exports being based on its factor endowments. The U.S.'s strength in high-tech capital equipment illustrates this, as does South Korea's shift from a capital importer to exporter due to its economic growth and investment in capital.
Step-by-step explanation:
The theory that explains a capital intensive country exporting products that are capital intensive is the Heckscher-Ohlin theory. This theory suggests that countries will export products that make intensive use of the factors of production in which they are well endowed. In the case of a capital intensive country, this means exporting goods that require a significant amount of capital to produce.
When technological changes occur, such as the increased use of computers in manufacturing processes, it can shift the demand toward more high-tech capital equipment. The United States, for instance, has a comparative advantage in this sector, leading to a boost in its net exports. Meanwhile, countries like South Korea have transitioned from being net importers of capital to net exporters as their investments in physical plant and equipment have led to economic growth and the ability to repay past borrowings through trade surpluses.
The Heckscher-Ohlin model contrasts with strategies like import substitution, which emphasizes producing goods domestically to reduce import dependence. This strategy often requires high tariffs to protect the newly established industries that are not utilizing the abundant unskilled labor, but rather demanding expensive capital and skilled labor, which are in short supply in developing countries.