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The Heckscher-Ohlin Model Is Famous for Being Elegant and Mathematically

question 11

Essay

The Heckscher-Ohlin model is famous for being elegant and mathematically sophisticated, yet failing to describe reality. One manifestation of this fact is Trefler's Case of Missing Trade. Explain what exactly is missing. In what sense is it missing?
How would you explain why it is missing?
How can a relaxation of the identical production functions explain the case of the missing trade?
How did the results obtained by Davis and Weinstein strengthen support for the validity of the HO model?


Definitions:

Political Motivations

The driving forces behind political actions, strategies, or behaviors rooted in specific ideological beliefs or goals.

Recidivism Rate

The rate at which convicted criminals reoffend, often used as a measure of the effectiveness of criminal justice systems.

Rigorous Training

Intensive, thorough, and demanding preparation or instruction, often used to achieve a high level of skill or knowledge.

Terrorism

The use of violence or the threat of violence, especially against civilians, in the pursuit of political goals.

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