Question

Under the Hecksher-Ohlin theory of comparative advantage, China has a comparative advantage in textile production because:

	1.	the U.S. is unwilling to apply trade sanctions in reprisal for China's human rights abuses
	2.	it cannot manufacture high tech products
	3.	it has superior textile production technology
	4.	textiles are labor-intensive products and China is labor-abundant
	5.	China is capable of producing higher quality textiles than other countries

Answer 1

Answer: (4) textiles are labor-intensive products and China is labor-abundant.

The explanation for the Answer above:

The Heckscher-Ohlin model is an economic model that focuses on the dynamics of international trade. The model proposes that countries that are rich in certain factors of production will export products in which they have a comparative advantage and import goods produced using their more scarce factors. It clarifies the principle of gains from trade both between countries. The Heckscher-Ohlin model is an economic model that focuses on the dynamics of international trade. The model proposes that countries that are rich in certain factors of production will export products in which they have a comparative advantage and import goods produced using their more scarce factors. It clarifies the principle of gains from trade both between countries.

The model determines a country's comparative advantage to differences in factor considerations. A factor of production is any resource that is used by companies to produce goods and services that are consumed by households. Countries with an abundant supply of certain factors of production have a comparative advantage in goods, which are produced primarily using that factor. Abundance in certain factors of production results in lower input costs and greater profitability in productions of those products.

Traded commodities or products are essentially determined upon four kinds of factors, including the following:

1. Natural Resources: Minerals, Petroleum products, natural gas, forest products, animal products and agricultural products, such as wheat, tea, coffee, Rubber etc.
2. Labor Resources: Workers in labor-intensive production, such as textiles, footwear, and handbags, furniture
3. Physical Resources: Infrastructure development Rail-Road transport system, Electricity, energy, Telecommunication, Machines, buildings etc.
4. Human Resources: Skilled and well-talented men power.

Therefore China has a comparative advantage in textile production because of Labor Resources.