Bertil Gotthard Ohlin

The institute of ‘Stiftelsen Bertil Ohlin’ built in 1933 still continues the work initiated by Ohlin himself in research and debate.

Ohlin was born into an upper-middle class family on 23 April, 1899, at the village of Klippan in Sweden, where he lived in a large home with his parents and six siblings.

His father was a district attorney and held a respectable position in society. His father provided him with a little private tutelagebefore he entered school at the age of seven years.

In school he displayed a brilliant aptitude for mathematics which was his favourite subject. He achieved his baccalaureate at ‘Halsingborg’ much earlier than other children of his age.

Owing to his propensity toward calculations and much to his delight, his parents suggested that he get enrolled for a degree in mathematics, statistics and economics at the ‘University of Lund’. At the university he studied under Professor Smil Sommarin and scored the highest in economics when he passed out of the university in 1917.

He was greatly influenced by an article that he read in a newspaper that reviewed a book on ‘Economic Aspects of the World War’ written by Eli Heckscher, who was then a professor at Stockholm Business School.

He applied for a jobat the University of Copenhagen and was appointed as a professor in January1925.

At Copenhagen Ohlin worked for five years, where he was influenced greatly by the humorous and highly intellectual Dr. L.V. Birck. At the university he also maintained a close rapport with his students.

In 1928 he sent a thesis to Harvard for the ‘David Well’s Prize’; however he received a letter the same year that the prize had been awarded to another economist. But they offered to print his manuscript in the ‘Harvard Economic Studies’.

Thrilled by the offer, he finished his manuscript in 1931. By this time he had begun working as a professor at Stockholm School of Business, where he was appointed as Heckscher’s successor.

It was after he joined Stockholm as professor that he began working on his International Trade Theorem, which came to be called the ‘Heckscher-Ohlin model of International Trade.’

Along with his teacher he proposed a principle that laid emphasis on trade between two countries which rested primarily on two goods of production and two factors of production such as relative amounts of capital and labour.

The theorem states that countries that are capital-abundant would have to pay higher wages and thus industries depending on labour would crush the economy of the country.

It was appropriate for such countries to produce in abundance goods that did not depend much on manual labour such as automobiles and chemicals, and import goods high on labour-value.

In contrast to this, countries low on capital and high in labour should generate goods that can be extensively acquired through labour – like textiles and simple electronics and import goods that are capital intensive.