Heckscher–Ohlin model
Okay kiddo, do you like toys? Imagine you have two types of toys: cars and dolls. Now, you have a friend who also has cars and dolls, but he likes dolls more than cars. You like cars more than dolls.
Now, let's pretend that you and your friend live in different countries. You live in a country where it's cheap to make cars, and your friend lives in a country where it's cheap to make dolls.
When countries trade with each other, they trade things they are good at making. So, you would sell your cars to your friend's country, and your friend would sell her dolls to your country. This is called trade.
In the Heckscher-Ohlin Model, it means that countries trade the goods that they are relatively better at producing based on their resources. In our example, your country has more resources (like factories and machines) to make cars while your friend's country has more resources to make dolls.
So, by trading with each other, you and your friend can enjoy more of the toys you like because you can get the ones you want more easily from each other's country.
That's the Heckscher-Ohlin Model explained as simply as possible, kiddo.
Now, let's pretend that you and your friend live in different countries. You live in a country where it's cheap to make cars, and your friend lives in a country where it's cheap to make dolls.
When countries trade with each other, they trade things they are good at making. So, you would sell your cars to your friend's country, and your friend would sell her dolls to your country. This is called trade.
In the Heckscher-Ohlin Model, it means that countries trade the goods that they are relatively better at producing based on their resources. In our example, your country has more resources (like factories and machines) to make cars while your friend's country has more resources to make dolls.
So, by trading with each other, you and your friend can enjoy more of the toys you like because you can get the ones you want more easily from each other's country.
That's the Heckscher-Ohlin Model explained as simply as possible, kiddo.