Q. "The H.O. model remains useful as a way to predict the income distribution effects of trade." Discuss.

Answer: The Stolper-Samuelson theorem, one of the basic theorems arising from the Heckscher-Ohlin model yields an elegant demonstration of the fact that changes in product prices such as will take place when trade is expanded or curtailed telescopes its effects onto factor prices thus that not only do relative factor returns mirror product prices however that actual returns to factors may either rise or fall in real terms. Therefore as a policy framework the disproportionate effect trade may have on real incomes of sectors such as skilled-labor is quite useful both theoretically and practically (or polemically).