ABSTRACT
The person who thoroughly entrenched interregional trade into modern neo-classical theory, and made it ever since an integral part of general equilibrium theory in 1933, was the Swedish economist Bertil Gotthard Ohlin, in his classic work Interregional and International Trade. Ohlin's great contribution was to take the theory of interregional and international trade out of its position of rather peculiar and indefensible isolation and bring it into the generally accepted general theory of equilibrium, in which "everything depends on everything." He was interested mainly in international trade theory as a device for explaining conditions under which trade took place and the distribution of gains from trade; and as a guide to foreign trade policy. The classical economists contended that the volume and pattern of trade between two regions or two countries depends on the amount of labour required to produce various commodities in each region.
