ABSTRACT
The most popular model of international trade, which is taught in nearly all courses of international economics, is the Heckscher-Ohlin (HO) model, named after the two Swedish economists, Eli Heckscher and Bertil Ohlin, who developed it early in the twentieth century. The HO model reflects mainstream neoclassical thinking and methodology. Like all neoclassical models, the HO model of international trade is based on an extensive set of unrealistic assumptions. For example, the HO model assumes that all product and factor markets are perfectly competitive, factor supplies are fixed in quantity, aggregate consumer preferences are the sum of individual preferences, preferences are stable and consistent over time, and market prices accurately reflect all the costs and benefits associated with the production of a good or service.
