Bertil Ohlin
Bertil Ohlin | |
|---|---|
Stockholm Municipality | |
| In office 1938–1970 | |
| President of the Nordic Council | |
| In office 1959–1959 | |
| Preceded by | Nils Hønsvald |
| Succeeded by | Gísli Jónsson |
| In office 1964–1964 | |
| Preceded by | Nils Hønsvald |
| Succeeded by | Sigurður Bjarnason |
| Personal details | |
| Born | Bertil Gotthard Ohlin 23 April 1899 PhD) |
| Known for | Heckscher–Ohlin model Heckscher–Ohlin theorem |
| Awards | Nobel Memorial Prize in Economic Sciences (1977) |
| Scientific career | |
| Fields | Economics |
| Institutions | University of Copenhagen (1925–1930) Stockholm School of Economics (1930–1965) |
| Doctoral advisor | Gustav Cassel |
Bertil Gotthard Ohlin (Swedish:
Ohlin's name lives on in one of the standard
Biography
Bertil Ohlin was raised in Klippan, Scania with seven siblings, where his father Elis was a civil servant and bailiff. His mother Ingeborg influenced him with her left-liberal views on the society, with nordic partnership and Karl Staaff as her role model. He received his B.A. from Lund University 1917 at the age of 18 and his MSc. from Stockholm School of Economics in 1919.[1]
He obtained an M.A. from
In 1937, Ohlin spent half a year at the University of California, Berkeley, as a visiting professor.[2][3][4] He also worked as an outside expert for the Economic and Financial Organization of the League of Nations, together with Oskar Morgenstern and Jacques Rueff, supporting the EFO's work on economic depressions in the late 1930s.[5]: 29
Later, Ohlin and other members of the "[[Stockholm Ohlin was party leader of the
Heckscher–Ohlin theorem
In 1933, Ohlin published a work that made him world-renowned, Interregional and International Trade. Ohlin built in it an economic theory of international trade from earlier work by Heckscher and his own doctoral thesis.[1] It is now known as the Heckscher–Ohlin model, one of the standard model economists use to debate trade theory.
The model was a breakthrough because it showed how comparative advantage might relate to general features of a country's capital and labor, and how those features might change through time. The model provided a basis for later work on the effects of protection on real wages, and has been fruitful in producing predictions and analysis; Ohlin himself used the model to derive the Heckscher–Ohlin theorem, which predicts that capital-abundant countries export capital-intensive goods, while labor-abundant countries export the labor-intensive goods.
The Heckscher–Ohlin Theorem, which is concluded from the Heckscher–Ohlin model of international trade, states: trade between countries is in proportion to their relative amounts of capital and labor. In countries with an abundance of capital, wage rates tend to be high; therefore, labor-intensive products, e.g. textiles, simple electronics, etc., are more costly to produce internally. In contrast, capital-intensive products, e.g. automobiles, chemicals, etc., are less costly to produce internally. Countries with large amounts of capital will export capital-intensive products and import labor-intensive products with the proceeds. Countries with high amounts of labor will do the reverse.
The following conditions must be true:
- The major factors of production, namely labor and capital, are not available in the same proportion in both countries.
- The two goods produced either require more capital or more labor.
- Labor and capital do not move between the two countries.
- There are no costs associated with transporting the goods between countries.
- The citizens of the two trading countries have the same needs.
The theory does not depend on total amounts of capital or labor, but on the amounts per worker. This allows small countries to trade with large countries by specializing in production of products that use the factors which are more available than its trading partner. The key assumption is that capital and labor are not available in the same proportions in the two countries. That leads to specialization, which in turn benefits the country's economic welfare. The greater the difference between the two countries, the greater the gain from specialization.
Wassily Leontief made a study of the theory that seemed to invalidate it. He noted that the United States had a lot of capital; therefore, it should export capital-intensive products and import labor-intensive products. Instead, he found that it exported products that used more labor than the products it imported. This finding is known as the Leontief paradox.
Awards and decorations
Commander Grand Cross of the Order of the Polar Star (4 June 1965)[6]
See also
- Contributions to liberal theory
- Ohlin Report (1956)
Significant publications
- The German Reparations Problem, 1930
- The Cause and Phases of the World Economic Depression. Report presented to the Assembly of the League of Nations Geneva: Secretariat of the League of Nations; 1931.
- Interregional and International Trade, 1933
- Mechanisms and Objectives of Exchange Controls, 1937
Sources
- Encyclopædia Britannica Online "International trade"
- NobelPrize.org "Why Trade?"
- Chapter 60 The Heckscher–Ohlin (Factor Proportions) Model
References
- ^ ISBN 978-3-030-03699-7.
- ^ "Berth Ohlin's Contributions to Economic Theory" (PDF). Archived from the original (PDF) on 14 December 2017. Retrieved 14 December 2017.
- ISBN 978-0262062282.
- ISBN 978-1137315397.
- SSRN 2173443
- SELIBR 3682754.
Further reading
- ISBN 978-0-415-07492-6.
External links
- Bertil Ohlin on Nobelprize.org including the Prize Lecture on 8 December 1977 1933 and 1977 – Some Expansion Policy Problems in Cases of Unbalanced Domestic and International Economic Relations
- Bertil Ohlin
- Bertil Ohlin Institute
- Ohlin's life
- Academician RACEF, Spain
- Presentation: The Young Ohlin on the Theory of Interregional and International Trade
- IDEAS/RePEc
- Newspaper clippings about Bertil Ohlin in the 20th Century Press Archives of the ZBW
