Heckscher-Ohlin Theorem

A theorem stating that a relatively labor-abundant nation will export a relatively labor-intensive good, while a relatively capital-abundant nation will export a relatively capital-intensive good.

For example if one country has many machines (capital) but few workers, while another country has a lot of workers but few machines, then according to the Heckscher-Ohlin theory, each country will specialize in the production of goods that it is particularly suited to produce. Countries in which capital is abundant and workers are few, therefore, specialize in the production of goods that, in particular, require capital. Specialization in the production and trade between countries generates, according to this theory, a higher standard-of-living for the countries involved.