Heckscher-ohlin theorem:

The  theory  of  comparative advantage  in the  Ricardian  hework was explained in terms of a one-factor model, where the only factor was labour. The comparative advantage was determined by technological differences. The Ricardian We work of  comparative  advantage  was fiuther  improved upon in the Heckscher-Ohlin (H-0) model. The H-0 model was first conceived by  two Swedish economists, Eli Heckscher and Bertil Ohlin. Rudimentary concepts were  further developed  and added later by Paul Samuelson  and Ronald Jones among others. Hence the  extension  of H-0 model  is referred  as Heckscher-Ohlin-Samuelson (H-0-S) model.

In this model, trade between different countries is caused due to differences in relative factor endowments of those countries. It  is a theory of long-term general equilibrium in which the two  factors are mobile between sectors. Thus the H-0  framework  sheds  new light on  the determinants of trade  in  terms of  'factor proportions'.  Furthermore,  it provides insights into the effects of trade on factor use and factor rewards. In its extension,  the Heckscher-Ohlin- Samuelson  (H-0-S)  model demonstrates how  the fiee movement of goods between counties may bring about the factor-price equalisation.

There are four main theorems in the H-0-S model (hereafter called the H-0 model  for convenience)  : 

(i) the Heckscher-Ohlin theorem,

(ii) the Stolper- Samuelson theorem,

(iii) the Factor-Price Equalisation theorem, and

(iv) the Rybczynski  theorem.