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Heckscher-Ohlin Model 2. There are two countries, Home and Foreign. There are two goods: beer (b) and corn (c), which are produced in both countries
Heckscher-Ohlin Model 2. There are two countries, Home and Foreign. There are two goods: beer (b) and corn (c), which are produced in both countries using capital (K) and labor (L). In both countries, it takes 2 units of labor and 1 unit of capital to make beer (aLb = 2, aKb = 1); and it takes 5 units of labor and 5 units of capital to make corn (aLc = 5, aKc = 5). Home has 100 units of labor and 100 units of capital (L = 100, K = 100), while Foreign has 120 units of labor and 20 units of capital (L = 120, K = 20)
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