Theoretical analysisIn the 1930s Eli Heckscher and Bertil Ohlin developed the theory of factor proportions, also known as the Heckscher-Ohlin model. This theory holds that countries will produce and export products that use large quantities of production factors that they have in abundance, and import products that require large quantities of production factors that they do not have (Rugman&Collinson, 2009). The original HO model is also called 2*2*2 model. Because it assumed that the only difference between countries was the relative abundance of labor and capital. The original HO model contained two countries and two goods that could be produced. For example, China has a large amount of labor while America has a large amount of capital. According to the HO theory, China will focus on producing labor-intensive goods and export them to America, in contrast, America has relatively more capital than labor and will specialize in capital-intensive goods. There are many assumptions of the theory. Both countries in the model have the same production technology. It is assumed that resource availability rates are the same in different countries. Furthermore, it is assumed that production must have a constant return to scale (CRS). In reality, the assumptions of the HO model cannot be satisfied. In 1954, an econometric test conducted by Wassily W. Leontief on the HO model found that the United States, despite having a relative abundance of capital, tended to export labor-intensive goods and import capital-intensive goods (wiki , 2012). This result is known as Leontief's paradox and has been explained in terms of the quality of labor input rather than simply hours of labor. The two theories above explain the relationships between import and... middle of paper... ....countries if the goods cannot meet the established standards. In addition to these, some other considerations can be considered. Employment, exchange rate, tariffs, quotas and other non-tariff barriers can affect comparability in a single location. Tariffs are imposed on goods shipped internationally. The government can set high tariffs to protect dominant industry and employment. In recent years, solar energy has become a growth industry. Both America and China want to export solar energy equipment. To protect the local industry, America established a high import tariff and also a restriction on the import of solar energy-related products. Meanwhile, taking advantage of the exchange rate and export duty refunds, China also encourages local solar energy. These barriers have a major impact on import and export actions. Not only the availability of resources has influenced the competitiveness of a place.