S/E/21. What are the Differences between Trade Theories based on Comparative Advantage, Specific Factors and Factor Proportions? Is There a Method of Reconciling the Content of These Three Theories? What Predictions can be derived from substituting Land and Skills for Capital and Labour in the Hecksher-Ohlin Model? Do These Predictions Survive Empirical Testing?

This paper outlines each of the competitive models of trade, from the comparative advantage to the specific factors and the Hecksher-Ohlin model. It highlights the key differences between the models and then goes on to reconcile them. Finally, the paper highlights the key criticism of the H-O model and offers a solution to this problem (citing key works from Leontief and Wood). This is a post-graduate style essay, but is applicable to all levels of study within the international trade context.