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It was the difference in technology that motivated advantageous international trade in the model.
The standard H-O model(1) begins by expanding the number of factors of production from one to two. The model assumes that labor and capital are used in the production of two final goods. Here, capital refers to the physical machines and equipment that is used in production. Thus, machine tools, conveyers, trucks, forklifts, computers, office buildings, office supplies, and much more, is considered capital.
All productive capital must be owned by someone. In a capitalist economy most of the physical capital is owned by individuals and businesses...
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