Question

The country of Dalima has long been a substantial exporter of seafood, reflecting its unusual abundance of coastal waters; in contrast, its continental neighbor, Bundeeza, has excelled in the export of goods produced in labor-intensive manufacturing industries. Based on this information, the export policies of the two countries is best explained by _________.a. mercantilism.

b. theory of absolute advantage.
c. Heckscher-Ohlin theory.
d. theory of comparative advantage.
e. Samuelson's critique.

Answer 1

C) Heckscher-Ohlin theory.

Step-by-step explanation:

The Heckscher–Ohlin model (H-O) was developed by Eli Heckscher and Bertil Ohlin and studies the comparative advantages that different countries possess when engaging in foreign trade.

These economists extended David Ricardo's model about trade and concluded that countries will engage in trading the products they produce using their abundant factors of production. E.g. countries with abundant land and labor will probably export agricultural products, while countries with abundant capital will export industrialized products.