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What is the specific content of HOS theory?

The Ricardian model is an important expansion of the absolute advantage theory proposed by A. Smith. The core idea is that when other conditions between countries are roughly the same, the differences in the comparative costs of producing the same commodity in each country due to the relative differences in technological levels between countries constitute the cause of international trade and determine the pattern of international trade. ; Free trade and international division of labor carried out according to this trade model promote the improvement of resource allocation worldwide and bring about an increase in the domestic welfare level of each trading country. After Ricardo, J. Mill, Alfred Marshall and F.Y. Edgeworth all made important contributions to the improvement of this model. Their research mainly focused on the terms of trade issues and some comparative static analysis. The explanation of the causes of comparative advantage did not go beyond the relative differences in technological levels mentioned by Ricardo.

In the 20th century, the situation has changed. The research of Swedish economists Heckscher and Ohlin shows that the difference in the relative scarcity of production factors between countries is a necessary condition for comparative cost differences, and therefore is also a necessary condition for international trade. Before and after, G. Haberler introduced the production possibility frontier and reinterpreted the meaning of comparative cost in terms of opportunity cost, thus completely breaking away from the relationship between the theory of comparative advantage and the labor theory of value. Coupled with the efforts of A. P. Lerner and M. M. Leontief during this period, especially Samuelson and others, the theory of comparative advantage was developed in a general equilibrium analysis framework with preferences, technology and factor endowments as boundary constraints. Systematically expressed. In the next half century or so, this comparative advantage theory, which took its modern form, has been occupying a dominant position in international trade theory and has become a branch of general equilibrium theory. In later research, this theory was often called HO theory; due to Samuelson's important role in the development of this theory, it was also called HOS theory; because this theory uses differences in factor endowments It explains comparative advantage, so it is also called factor endowment theory. It should be pointed out that from its practical significance, this theory is to a large extent a supplement rather than a replacement for Ricardo's theory of comparative advantage based on international technological differences. However, because this theory adopted the neoclassical general equilibrium analysis method, it quickly replaced the Ricardian model and became the most important theory among pure theories of modern international trade. This article calls it the modern theory of comparative advantage.

This theory has two central concepts: factor abundance and factor intensity. Its basic structure was summarized by later researchers into four basic theorems (theorem). They are the Heckscher-Ohlin (H-O) theorem, the Stolper-Samuelson (S-S) theorem, and the factor-price equalization (FPT) theorem. Or called the H-O-S theorem, and Rybczynski's theorem.

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