Is there a theoretical explanation for the growth in Medical Transcription Outsourcing to India? Yes indeed there is a cause and effect for everything and it is believed that the HOS ( Heckscher-Ohlin-Samuelson ) theory in economics has the explanation. Recent literature has applied Heckscher-Ohlin-Samuelson (HOS) theory of comparative advantage to explain international trade in services.

 

Actually the theory originates from the Heckscher-Ohlin model (H-O model) which is a general equilibrium mathematical model of international trade and was developed by Eli Heckscher and Bertil Ohlin. HOS theory is a variation of the H-O model and states that comparative advantages are functions of their comparative factor endowments. The theory says that exports of a capital-abundant country will be from Capital intensive industries, and labour -abundant countries will import such goods, exporting labour intensive goods in return. Therefore the relative abundance in capital will cause the capital-abundant country to produce the capital-intensive good cheaper than the labor abundant country and vice versa.

 

However there are certain basic assumptions of the HOS theory about the concerned countries. These are that the countries must have,