Bertil Ohlin

Bertil Gotthard Ohlin (Swedish: [ˈbæʈːɪl ʊˈliːn]) (23 April 1899 – 3 August 1979) was a Swedish economist and politician. He was a professor of economics 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, from 1944 to 1967. He served briefly as Minister for Trade from 1944 to 1945 in the Swedish coalition government during World War II. He was President of the Nordic Council in 1959 and 1964.

Ohlin's name lives on in one of the standard mathematical models of international free trade, the Heckscher–Ohlin model, which he developed together with Eli Heckscher. He was jointly awarded the Nobel Memorial Prize in Economic Sciences in 1977 together with the British economist James Meade "for their pathbreaking contribution to the theory of international trade and international capital movements".

Bertil Ohlin
Bertil Ohlin
Bertil Ohlin
Minister for Trade
In office
Prime MinisterPer Albin Hansson
Preceded byHerman Eriksson
Succeeded byGunnar Myrdal
Leader of the People's Party
In office
Preceded byGustaf Andersson
Succeeded bySven Wedén
Member of the Swedish Parliament
for Stockholm Municipality
In office
President of the Nordic Council
In office
Preceded byNils Hønsvald
Succeeded byGísli Jónsson
In office
Preceded byNils Hønsvald
Succeeded bySigurður Bjarnason
Personal details
Born23 April 1899
Klippan, Skåne County
Died3 August 1979 (aged 80)
Åre, Jämtland County
Political partyPeople's Party
Alma materB.A. Lund University (1917)
MSc. Stockholm School of Economics (1919)
M.A. Harvard University (1923)
Ph.D. Stockholm University (1924)
Bertil Ohlin
Known forHeckscher–Ohlin model
Heckscher–Ohlin theorem
AwardsNobel Memorial Prize in Economic Sciences (1977)
Scientific career
InstitutionsUniversity of Copenhagen (1925–1930)
Stockholm School of Economics (1930–1965)
Doctoral advisorGustav Cassel


Having received his B.A. from Lund University 1917 and his MSc. from Stockholm School of Economics in 1919. He obtained an M.A. from Harvard University in 1923 and his doctorate from Stockholm University in 1924. In 1925 he became a professor at the University of Copenhagen. In 1929 he debated with John Maynard Keynes, contradicting the latter's view on the consequences of the heavy war reparations payments imposed on Germany. (Keynes predicted a war caused by the burden of debt, Ohlin thought that Germany 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 economics, 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 Heckscher–Ohlin model, one of the standard model economists use to debate trade theory.

The model was a break-through because it showed how comparative advantage might relate to general features of a country's capital 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, 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, as a visiting professor.[1][2][3]

Later, Ohlin and other members of the "Stockholm school" extended Knut Wicksell'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 Governments of the era, and from '44 to '45 was minister of commerce in the wartime government. His daughter Anne Wibble, representing the same party, served as Minister of Finance 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 Heckscher–Ohlin model 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.

See also

Significant publications

Ohlin - Interregional and international trade, 1933 - 5175280
Interregional and international trade, 1933



  2. ^ Findlay, Ronald; Jonung, Lars; Lundahl, Mats (2002). Bertil Ohlin: A Centennial Celebration, 1899-1999. MIT Press. ISBN 9780262062282.
  3. ^ Toporowski, J. (2013-07-29). Michał Kalecki: An Intellectual Biography: Volume I Rendezvous in Cambridge 1899-1939. Springer. ISBN 9781137315397.

Further reading

External links

Party political offices
Preceded by
Gustaf Andersson
Chairman of the People's Party
Succeeded by
Sven Wedén
Political offices
Preceded by
Herman Eriksson
Minister for Trade
Succeeded by
Gunnar Myrdal
Preceded by
Milton Friedman
Laureate of the Nobel Memorial Prize in Economics
Served alongside: James E. Meade
Succeeded by
Herbert A. Simon
1899 in Sweden

Events from the year 1899 in Sweden

1948 Swedish general election

General elections were held in Sweden on 19 September 1948. Despite a campaign by a large part of the Swedish press against socializing insurances, controlled foreign trade and rationing regulations still in use since the war, freshman Prime Minister and Social Democratic leader Tage Erlander managed to defeat the People's Party-led opposition under Bertil Ohlin by a higher election turnout. He maintained his government with only minor losses and the Swedish Social Democratic Party remained the largest party, winning 112 of the 230 seats in the Second Chamber of the Riksdag. Erlander was later to stay on as Prime Minister until 1969, in 1951-1957 his government included the party Farmers' League.

Anne Wibble

Anne Marie Wibble (born Anne Ohlin, 13 October 1943 Stockholm – 14 March 2000 Stockholm) was a Swedish politician (member of the Liberal People's Party). From 1991 to 1994 she served as Sweden`s first female Minister for Finance. She was the daughter of Bertil Ohlin, a 1977 Nobel laureate.

Eli Heckscher

Eli Filip Heckscher (24 November 1879 – 23 December 1952) was a Swedish political economist and economic historian.

Faustmann's formula

Faustmann's formula, or the Faustmann Model, gives the present value of the income stream for forest rotation. It was derived by the German forester Martin Faustmann in 1849.

The rotation problem, deciding when to cut down the forest, means solving the problem of maximising Faustmann's formula and this was solved by Bertil Ohlin in 1921 to become the Faustmann-Ohlin theorem, although other German foresters were aware of the correct solution in 1860.

ƒ(T) is the stock of timber at time T
p the price of timber and is constant
which implies that the value of the forest at time T is pf(T)
r is the discount rate and is also constant.

The Faustmann formula is as follows:

From this formula two theorems are interpreted:

The optimal time to cut the forest is when the time rate of change of its value is equal to interest on the value of the forest plus the interest on the value of the land.
The optimal time to cut is when the time rate of change of its value is equal to the interest rate modified by land rent.
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 export the capital-intensive good, while the labor-abundant country will export the labor-intensive good."

The critical assumption of the Heckscher–Ohlin model is that the two countries are identical, except for the difference in resource endowments. This also implies that the aggregate preferences are the same. 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.

Initially, when the countries are not trading:

the price of the capital-intensive good in the capital-abundant country will be bid down relative to the price of the good in the other country,

the price of the labor-intensive good in the labor-abundant country will be bid down relative to the price of the good in the other country.Once trade is allowed, profit-seeking firms will move their products to the markets that have (temporary) higher price. As a result:

the capital-abundant country will export the capital-intensive good,

the labor-abundant country will export the labor-intensive good.The Leontief paradox, presented by Wassily Leontief in 1951, found that the U.S. (the most capital-abundant country in the world by any criterion) exported labor-intensive commodities and imported capital-intensive commodities, in apparent contradiction with the Heckscher–Ohlin theorem. However, if labor is separated into two distinct factors, skilled labor and unskilled labor, the Heckscher–Ohlin theorem is more accurate. The U.S. tends to export skilled-labor-intensive goods, and tends to import unskilled-labor-intensive goods.


In economics, internationalization is the process of increasing involvement of enterprises in international markets, although there is no agreed definition of internationalization. There are several internationalization theories which try to explain why there are international activities.

James Meade

James Edward Meade, (23 June 1907 – 22 December 1995) was a British economist and winner of the 1977 Nobel Memorial Prize in Economic Sciences jointly with the Swedish economist Bertil Ohlin for their "pathbreaking contribution to the theory of international trade and international capital movements."

Meade was born in Swanage, Dorset. He was educated at Malvern College and attended Oriel College, Oxford in 1926 to read Greats, but switched to Philosophy, Politics and Economics and gained an outstanding first. His interest in economics grew from an influential postgraduate year at Christ's College, Cambridge and Trinity College, Cambridge (1930–31), where he held frequent discussions with leading economists of the time including Dennis Robertson and John Maynard Keynes.

After working in the League of Nations and the Cabinet Office, he was the leading economist of the early years of Attlee's government, before taking professorships at LSE (1947–57) and Cambridge (1957–67).

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).Staaff was active in the Swedish movement for universal suffrage, and as the Liberal party's Prime Minister he presided in 1905 over an attempt to introduce universal and equal suffrage for men. His successor as party leader, Nils Edén, eventually managed to carry this further into universal suffrage in 1918–19, including for women. Due to conservative intervention, Staaff's proposal for first past the post was ultimately scrapped for a proportional system. In 1912, the period of leave that women were allowed following a child’s birth was extended to 6 weeks, and in 1913 a tax-financed pension scheme was introduced.Staaff ran into sharp conflict with the conservative Swedish establishment, and became a hated figure in the Conservative, pro-Monarchic and anti-Democratic establishment. An intense smear campaign was launched against him, picturing him as the destroyer of Swedish tradition and society: wealthy Stockholmers could even buy ash-trays shaped as his head. His staunch anti-military politics created the greatest fundraising in the Swedish history until that time, the 12 M kronor coastal battleship HSwMS Sverige where the funds where raised in a few months in 1912. Staaff had to bite the lemon, and the ship was ordered.

In 1914 Staaff stepped down from government in protest, after Conservatives had summoned a farmers' demonstration at the Royal castle's court in Stockholm, where King Gustaf V – who according to the law was supposed to stay out of politics – denounced Staaff's defence policies.

The contemporary Swedish Liberal party The Liberals counts him as the first among the more prominent leaders of Swedish 20th century liberalism, followed by such parliamentarians as Nils Edén, Carl Ekman, Nobel Prize laureate Bertil Ohlin, Gunnar Helén, Per Ahlmark and Bengt Westerberg.

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 the noted feminist Anna Bugge.

Liberalism and centrism in Sweden

This article gives an overview of liberalism and centrism in Sweden. It is limited to liberal and centrist parties with substantial support, mainly proved by having had a representation in parliament. The sign ⇒ denotes another party in that scheme. For inclusion in this scheme it isn't necessary so that parties labeled themselves as a liberal party.

List of Nobel laureates associated with the University of Copenhagen

A number of Nobel laureates are associated with the University of Copenhagen, either as graduates, researchers, or teaching staff.

The bulk of the 32 associated laureates are/were physics-related, owing to the Institute for Theoretical Physics headed by Niels Bohr, however an economics prize is also represented (Bertil Ohlin), as well as two literature prizes (Johannes V. Jensen and Karl Adolph Gjellerup).

List of liberal theorists

Individual contributors to classical liberalism and political liberalism are associated with philosophers of the Enlightenment. Liberalism as a specifically named ideology begins in the late 18th century as a movement towards self-government and away from aristocracy. It included the ideas of self-determination, the primacy of the individual and the nation, as opposed to the state and religion, as being the fundamental units of law, politics and economy.

Since then liberalism has broadened to include a wide range of approaches from Americans Ronald Dworkin, Richard Rorty, John Rawls and Francis Fukuyama as well as the Indian Amartya Sen and the Peruvian Hernando de Soto. Some of these people moved away from liberalism, while others espoused other ideologies before turning to liberalism. There are many different views of what constitutes liberalism, and some liberals would feel that some of the people on this list were not true liberals. It is intended to be suggestive rather than exhaustive. Theorists whose ideas were mainly typical for one country should be listed in that country's section of liberalism worldwide. Generally only thinkers are listed, politicians are only listed when they, beside their active political work, also made substantial contributions to liberal theory.


Ohlin is a Swedish surname. Notable people with the surname include:

Alix Ohlin, Canadian writer

Axel Ohlin (1867–1903), Swedish zoologist and explorer

Bertil Ohlin (1899–1979), Swedish economist and politician

Jörgen Ohlin (1937–2013), Swedish footballer

Lisa Ohlin (born 1960), Swedish screenwriter and director

Lloyd Ohlin (1918–2008), American sociologist and criminologist

Mattias Ohlin (born 1978), Swedish swimmer

Per "Dead" Ohlin (1969–1991), Swedish singer

Sture Ohlin (born 1935), Swedish biathlon competitor

Ohlin Report

The Ohlin Report was a report drafted by a group of experts of the International Labour Organization led by Bertil Ohlin in 1956. Together with the Spaak Report it provided the basis for the Treaty of Rome on the common market in 1957 and the creation of the European Economic Community in 1958.

Stockholm School of Economics

The Stockholm School of Economics (SSE; Swedish: Handelshögskolan i Stockholm, HHS) is one of Europe's leading business schools. SSE offers BSc, MSc and MBA programs, along with highly regarded PhD- and Executive Education programs.

SSE's Master program in Finance is ranked no.18 worldwide as of 2018. The Masters in Management program is ranked no. 12 worldwide by the Financial Times. QS ranks SSE no.26 among universities in the field of economics worldwide. The school is the only privately funded university in Sweden and is often considered as the most selective and prestigious academic institution in the Nordics.

SSE is accredited by EQUIS and is a member of CEMS.

SSE has founded sister organizations: SSE Riga in Riga, Latvia, and SSE Russia in St Petersburg and Moscow, Russia. It also operates the European Institute of Japanese Studies (Japanese, kanji: 欧州日本研究所, Japanese, romaji: Ōshū Nihon kenkyūjo), a research institute in Tokyo, Japan.

Stockholm school (economics)

The Stockholm School (Swedish: Stockholmsskolan), is a school of economic thought. It refers to a loosely organized group of Swedish economists that worked together, in Stockholm, Sweden primarily in the 1930s.

The Stockholm School had—like John Maynard Keynes—come to the same conclusions in macroeconomics and the theories of demand and supply. Like Keynes, they were inspired by the works of Knut Wicksell, a Swedish economist active in the early years of the twentieth century.

William Barber’s comment upon Gunnar Myrdal´s work on monetary theory goes like this:

“If his contribution had been available to readers of English before 1936, it is interesting to speculate whether the ‘revolution’ in macroeconomic theory of the depression decade would be referred to as ‘Myrdalian’ as much as ‘Keynesian’”

Sven Wedén

Sven Wedén (23 July 1913, Eskilstuna – 31 March 1976, Båstad) was a Swedish politician. He was the leader of the Swedish People's Party from 1967 to 1969.

Wedén survived severe tuberculosis and became a businessman in the family company, a metal manufacturing firm. Wedén had no higher education but became a self-learned intellectual, starting with extensive reading during long sejours at tuberculosis hospitals. He was strongly pro-British and influenced by reading about British parliamentary life. Wedén also was passionately anti-nazi and during World War II he joined the liberal party of Sweden, the People's Party, where he became city councillor, chairman of the youth organization and member of parliament.

In parliament Wedén for many years worked with housing and defence policy, but over the years he became part of the small circle of leading liberals around Bertil Ohlin and finally Ohlins successor as chairman and parliamentary leader. However Wedéns health was now broken and after his only election campaign as party leder, which ended with a setback, he resigned as party chairman 1968 and retired from parliament after the election 1970.

Transfer problem

The transfer problem refers to the possibility that a debtor country might end up

better off after making payments to its creditor countries. It was a subject of debate between John Maynard Keynes and Bertil Ohlin in the 1920s, regarding the issue of the ability of German reparation payment after World War I. In general terms, it refers to the effect of transfer of income on the donor's terms of trade. The reversal of capital flows force countries to go from a current account deficit to a current account surplus.

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