Question

In a Heckscher-Ohlin context, other things equal, growth of the relatively-abundant factor of production in a country that is a "large" country will lead to __________ willingness to trade and to __________ in the country’s terms of trade.

Answer 1

In a Heckscher-Ohlin context, other things equal, growth of the relatively-abundant factor of production in a country that is a "large" country will lead to greater willingness to trade and to Improve in the country’s terms of trade.

Step-by-step explanation:

The Heckscher-Ohlin context proposes that countries export what they can most efficiently and plentifully produce in order to foster increase in exports

It involves reaching a mutual understanding that emphasizes the export of goods requiring factors of production that a country has in abundance

There are two factors – capital and labor shared according to the one each country has in abundance. If Countries have similar production technology, they will share same.

The Heckscher-Ohlin theorem predicts the pattern of trade: it says that a capital-abundant (labor-abundant) country will export the capital-intensive (labor-intensive) good and import the labor-intensive (capital-intensive) good.

Answer 2

In a Heckscher-Ohlin context, other things equal, growth of the relatively-abundant factor of production in a country that is a "large" country will lead to greater willingness to trade and to add in the country’s terms of trade.

Step-by-step explanation:

The Factor Proportions Theory by Eli Heckscher and Bertil Ohlin states that countries will produce and export products that use large amounts of production factors that they have in abundance, and they will import products requiring large amounts of production factors that they lack (Rugman&Collinson, 2009).

The Heckscher-Ohlin theorem further predicts the pattern of trade: it says that a capital-abundant (labor-abundant) country will export the capital-intensive (labor-intensive) good and import the labor-intensive (capital-intensive) good.