User:Narxysus/FactorAbundance

Factor abundance refers to differences in factor endowments between trading regions, where factors are inputs into the traded commodities. There are two types of factor abundance - absolute abundance and relative abundance. This terminology is used when describing the source of a country's comparative advantage under the assumptions of the Heckscher-Ohlin model, generally alluding to relative abundance.

Absolute factor abundance
Absolute abundance is the simplest of the two forms. A region is absolutely abundant in a factor if it has absolutely more of the factor than the other region in comparison. For example, if Japan has more capital than Australia, and Australia more land than Japan, then Japan will be absolutely capital abundant, and Australia will be absolutely land abundant.

Relative factor abundance
The more difficult of the two meanings, relative factor abundance refers to the endowment of a factor relative to the endowment of another factor. Assuming two factors A and B, a region is said to be relatively abundant in factor A if the ratio of A to B in that region is greater than the same ratio of another region. Note that this will only occur if the