Ricardian and Heckscher–Ohlin Models of Comparative Advantage

In the Ricardian model, labor is the only (variable) factor of production.

Differences in labor productivity, reflecting underlying differences in technology, are the source of comparative advantage and hence the key driver of trade in this model.

Although differences in technology may be a major source of comparative advantage at a given point in time, other countries can close the technology gap or even gain a technological advantage. (E.g. Shift of IT service to India)

In the Heckscher–Ohlin Model (also known as the factor-proportions theory), both capital and labor are variable factors of production.

Differences in the relative endowment of these factors are the source of a country’s comparative advantage.