Bertil Gotthard Ohlin () (23 April 1899 – 3 August 1979) was a Swedish

economist An economist is a professional and practitioner in the social sciences, social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this ...

and

politician A politician is a person active in party politics, or a person holding or seeking an elected office in government. Politicians propose, support, reject and create laws that govern the land and by an extension of its people. Broadly speaking, ...

. He was a professor of

economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...

at the Stockholm School of Economics from 1929 to 1965. He was also leader of the People's Party, a social-liberal party which at the time was the largest party in opposition to the governing

Social Democratic Party The name Social Democratic Party or Social Democrats has been used by many political parties in various countries around the world. Such parties are most commonly aligned to social democracy as their political ideology. Active parties For ...

, from 1944 to 1967. He served briefly as Minister of Commerce and Industry from 1944 to 1945 in the Swedish coalition government during World War II. He was President of the

Nordic Council The Nordic Council is the official body for formal inter-parliamentary Nordic cooperation among the Nordic countries. Formed in 1952, it has 87 representatives from Denmark, Finland, Iceland, Norway, and Sweden as well as from the autonomou ...

in 1959 and 1964. Ohlin's name lives on in one of the standard

mathematical model A mathematical model is a description of a system using mathematical concepts and language. The process of developing a mathematical model is termed mathematical modeling. Mathematical models are used in the natural sciences (such as physics, ...

s of international

free trade Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econ ...

, the

Heckscher–Ohlin model The Heckscher–Ohlin model (, H–O model) is a general equilibrium mathematical model of international trade, developed by Eli Heckscher and Bertil Ohlin at the Stockholm School of Economics. It builds on David Ricardo's theory of comparative a ...

, which he developed together with Eli Heckscher. He was jointly awarded the

Nobel Memorial Prize in Economic Sciences The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel ( sv, Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), is an economics award administered ...

in 1977 together with the British economist James Meade "for their pathbreaking contribution to the theory of

international trade International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (see: World economy) In most countries, such trade represents a significa ...

and international

capital movement In international economics, the balance of payments (also known as balance of international payments and abbreviated BOP or BoP) of a country is the difference between all money flowing into the country in a particular period of time (e.g., ...

s".

Biography

Bertil Ohlin was raised in

Klippan, Scania Klippan (literally ''the Cliff'', old da, Klippen) is a locality and the seat of Klippan Municipality, Skåne County, Sweden Sweden, formally the Kingdom of Sweden,The United Nations Group of Experts on Geographical Names states that t ...

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 Karl Albert Staaff (21 January 1860 – 4 October 1915) was a Swedish liberal politician and lawyer. He was chairman of the Liberal Coalition Party (1907–1915) and served twice as Prime Minister of Sweden (1905–1906 and 1911–1914). Staaf ...

as her role model. Having received his B.A. from

Lund University , motto = Ad utrumque , mottoeng = Prepared for both , established = , type = Public research university , budget = SEK 9 billion Stockholm School of Economics in 1919. He obtained an M.A. from

Harvard University Harvard University is a private Ivy League research university in Cambridge, Massachusetts. Founded in 1636 as Harvard College and named for its first benefactor, the Puritan clergyman John Harvard, it is the oldest institution of highe ...

in 1923 and his doctorate from

Stockholm University Stockholm University ( sv, Stockholms universitet) is a public research university in Stockholm, Sweden, founded as a college in 1878, with university status since 1960. With over 33,000 students at four different faculties: law, humanities, ...

in 1924. In 1925 he became a professor at the

University of Copenhagen The University of Copenhagen ( da, Københavns Universitet, KU) is a prestigious public university, public research university in Copenhagen, Copenhagen, Denmark. Founded in 1479, the University of Copenhagen is the second-oldest university in ...

. In 1929 he debated with

John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...

, contradicting the latter's view on the consequences of the heavy war

reparations Reparation(s) may refer to: Christianity * Restitution (theology), the Christian doctrine calling for reparation * Acts of reparation, prayers for repairing the damages of sin History *War reparations **World War I reparations, made from ...

payments imposed on

Germany Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwee ...

. (Keynes predicted a war caused by the burden of

debt Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The ...

, Ohlin thought that

could afford the reparations.) The debate was important in the modern theory of unilateral international payments. In 1930 Ohlin succeeded Eli Heckscher, his teacher, as a professor of

, at the Stockholm School of Economics. In 1933 Ohlin published a work that made him world-renowned, ''Interregional and International Trade''. In this Ohlin built an economic theory of international trade from earlier work by Heckscher and his own doctoral thesis. It is now known as the

, one of the standard model economists use to debate

trade theory International trade is the exchange of capital, goods, and services across international borders or territories because there is a need or want of goods or services. (see: World economy) In most countries, such trade represents a significant s ...

. The model was a break-through because it showed how

comparative advantage In an economic model, agents have a comparative advantage over others in producing a particular good if they can produce that good at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to trade. C ...

might relate to general features of a country's

capital Capital may refer to: Common uses * Capital city, a municipality of primary status ** List of national capital cities * Capital letter, an upper-case letter Economics and social sciences * Capital (economics), the durable produced goods used fo ...

and labor, and how these 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 The Heckscher–Ohlin theorem is one of the four critical theorems of the Heckscher–Ohlin model, developed by Swedish economist Eli Heckscher and Bertil Ohlin (his student). In the two-factor case, it states: "A capital-abundant country will exp ...

, that nations would specialize in industries most able to utilize their mix of national resources efficiently. Today, the theory has been largely disproved, yet it is still a useful framework by which to understand international trade. In 1937, Ohlin spent half a year at the

University of California, Berkeley The University of California, Berkeley (UC Berkeley, Berkeley, Cal, or California) is a public land-grant research university in Berkeley, California. Established in 1868 as the University of California, it is the state's first land-grant un ...

, as a visiting professor. Later, Ohlin and other members of the " Stockholm school" extended

Knut Wicksell Johan Gustaf Knut Wicksell (December 20, 1851 – May 3, 1926) was a leading Swedish economist of the Stockholm school. His economic contributions would influence both the Keynesian and Austrian schools of economic thought. He was married to t ...

's economic analysis to produce a theory of the macroeconomy anticipating Keynesianism. Ohlin was party leader of the liberal Liberal People's Party from 1944 to 1967, the main opposition party to the

Social Democrat Social democracy is a political, social, and economic philosophy within socialism that supports political and economic democracy. As a policy regime, it is described by academics as advocating economic and social interventions to promote soc ...

Governments of the era, and from 1944 to 1945 was Minister of Commerce and Industry in the wartime government. His daughter Anne Wibble, representing the same party, served as

Minister for Finance A finance minister is an executive or cabinet position in charge of one or more of government finances, economic policy and financial regulation. A finance minister's portfolio has a large variety of names around the world, such as "treasury", " ...

from 1991 to 1994. In 2009, a street adjacent to the Stockholm School of Economics was named after Ohlin: "Bertil Ohlins Gata".

Heckscher–Ohlin theorem

The Heckscher–Ohlin Theorem, which is concluded from the

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

Order of the Polar Star - Ribbon bar, pre 1975

Commander Grand Cross of the

Order of the Polar Star The Royal Order of the Polar Star ( Swedish: ''Kungliga Nordstjärneorden'') is a Swedish order of chivalry created by King Frederick I on 23 February 1748, together with the Order of the Sword and the Order of the Seraphim. The Order of t ...

(4 June 1965)

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"

References

External links

* 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 Institute

Ohlin's life

Academician RACEF, Spain

Presentation: The Young Ohlin on the Theory of Interregional and International Trade

* * {{DEFAULTSORT:Ohlin, Bertil 1899 births 1979 deaths People from Klippan Municipality Swedish economists Members of the Riksdag from the Liberals (Sweden) Members of the Första kammaren Leaders of political parties in Sweden Lund University alumni Harvard University alumni Stockholm University alumni University of Copenhagen faculty Stockholm School of Economics faculty Trade economists Nobel laureates in Economics Swedish Nobel laureates Swedish social liberals Stockholm School of Economics alumni Members of the Andra kammaren Monetary economists Financial economists Keynesians Macroeconomists Fellows of the Econometric Society Commanders Grand Cross of the Order of the Polar Star