Which trade theory posits that countries export goods using their abundant factors of production?

The Heckscher–Ohlin model says countries export goods that use their relatively abundant factors of production intensively.

Its basic logic is comparative advantage through factor endowments. A capital-abundant country can produce capital-intensive goods at relatively lower cost, while a labor-abundant country can produce labor-intensive goods more cheaply. Trade therefore sends each country’s factor-intensive products abroad and brings in goods that rely on relatively scarce domestic factors.

Swedish economist Eli Heckscher developed the underlying idea, and his student Bertil Ohlin gave the theory its fuller form. Ohlin’s 1933 book, Interregional and International Trade, was a major statement of the model. The simplified version is often called the 2×2×2 model: two countries, two goods and two factors, usually capital and labor.

The model is not the same as the Ricardian model, which emphasizes productivity or technology differences. It also makes restrictive assumptions, including similar technologies and limited international factor mobility. The famous Leontief paradox, identified from U.S. trade data in 1951, challenged its simple predictions; later versions distinguish skilled from unskilled labor and add technology, human capital and other factors.