Should economists discard the heckscher-ohlin theorem

Reference no: EM132178026

Question: 1. If U.S. tariffs and other trade barriers are placed more heavily on labor-intensive goods than on capital-intensive goods because of the H-O suggestion that the scarce factor of production gains from protection, how do you explain why many developing countries also have relatively high import barriers on labor-intensive goods?

2. Should economists discard the Heckscher-Ohlin theorem as a practical explanation of trade patterns and search for other theories of trade? Or should they seek better ways of testing Heckscher-Ohlin? Explain.

Reference no: EM132178026

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