According to the Heckscher-Ohlin theory, which one of the following statements is correct?
A. Trade should take place among countries that have greater differences in their factor endowments.
B. A country with a relatively cheaper cost of labour would export labour-intensive products.
C. Country benefits from international trade even if it is less efficient than other nations.
D. Countries with the proximity of geographical locations would have greater trade compared to the distant ones.

Choose the correct option :-

Correct option is A

The Heckscher-Ohlin theory, also known as the factor proportions theory, asserts that countries will specialize in and export goods that intensively use factors of production that they have in abundance and are relatively cheaper compared to other countries. Conversely, they will import goods that require factors of production in which they are relatively scarce and expensive.
Option (A) is correct as the Heckscher-Ohlin theory specifically state that trade should occur between countries with greater differences in their factor endowments.
According to the Heckscher-Ohlin theory, A country with a relatively cheaper cost of labor would export labor-intensive products. Hence, option (B) is also correct.