Bertil G. Ohlin (1899–1979)

Bertil Ohlin was born in Klippan, Sweden in 1899. He studied economics, mathematics and statistics at the University of Lund, obtaining a BA in 1917. He subsequently studied at the Stockholm School of Economics and Business, Harvard University and the University of Cambridge, before being awarded a doctorate from the University of Stockholm in 1924 with his thesis, ‘The Theory of Trade’. From 1925 to 1930, Ohlin was Professor of Economics at the University of Copenhagen. In 1930 he returned to the Stockholm School of Economics and Business where he held the post of Professor of Economics until his retirement in 1965.
In addition to his academic career, Ohlin was actively engaged in politics. During his political career he was chairman of the Liberal Youth Federation from 1934 to 1939, a member of the Swedish Parliament from 1938 to 1970, leader of the (opposition) Swedish Liberal Party from 1944 to 1967, and he served in the coalition government as Minister of Trade from 1944 to 1945. In 1977 Ohlin was awarded, jointly with the British economist James Meade, the Nobel Memorial Prize in Economics ‘for their pathbreaking contribution to the theory of international trade and international capital movements’ (Nobel Foundation, 2004).Although Ohlin first gained international recognition in the late 1920s following his debate with John Maynard Keynes on the transfer problem in the context of Germany’s First World War reparations (see Ohlin, 1929a; 1929b), his international reputation was steadfastly established in 1933 with the publication of his seminal book, Interregional and International Trade (Ohlin, 1933b). Building upon, and extending, the work of his teacher Eli Heckscher (most notably Heckscher’s article, ‘The Effect of Foreign Trade on the Distribution of Income’ published in Swedish in 1919), Ohlin explained the pattern of international trade in terms of the relative factor endowments of different countries. According to what became known as the Heckscher–Ohlin theorem, assuming similar demand patterns in trading countries, a country will export those goods that require factors of production with which it is abundantly endowed and import those goods that require, if home produced, its relatively scarce factors. The model quickly became integrated into textbooks on international trade and provided fertile ground for much subsequent research by scholars who sought to theoretically develop the model and empirically test its implications (see, for example, the entries on Paul Samuelson, the 1970 Nobel Memorial Laureate and Wassily Leontief, the 1973 Nobel Memorial Laureate).

In addition to his seminal contribution to the theory of international trade, Ohlin also made important contributions to macroeconomics. In a number of publications (for example, Ohlin, 1927; 1933a) he anticipated some of the ideas (such as the multiplier) which formed the building blocks of the Keynesian revolution in macroeconomic thought. Indeed it can be argued that Ohlin, along with other members of the ‘Stockholm School’ (see the entry on Gunnar Myrdal, the 1974 Nobel Memorial Laureate), was a precursor of Keynes and that he anticipated some of the key ideas contained in Keynes’s General Theory of Employment, Interest and Money published in 1936 (see, for example, Ohlin, 1937).

Ohlin’s main contribution to economics is undoubtedly his model of international trade. The measure of his insight can be gleaned from the fact that, more than 70 years after it was first put forward, nearly all textbooks on international trade devote space to a discussion of the Heckscher–Ohlin model. His lasting impact on economics is even more remarkable when one considers that, in addition to his distinguished career as an economist, he also pursued a very active career as a politician and journalist. In the latter case he was a prolific writer, contributing economic and political articles on a regular basis to Swedish daily newspapers from the early 1920s until his death in 1979.

Main Published Works
(1927), Get Production Going, Stockholm: Aschehaug, published in Swedish.
(1929a), ‘The Reparation Problem: A Discussion, I. Transfer Difficulties, Real and Imagined’, Economic Journal, 39, June, pp. 172–8.
(1929b), ‘Mr. Keynes’ Views on the Transfer Problem: A Rejoinder’, Economic Journal, 39, September, pp. 400–404.
(1933a), ‘To the Question of the Formulation of Monetary Theory’, Ekonomisk Tidskrift, 35, March, pp. 45–81, published in Swedish; published in English in 1978 in History of Political Economy, 10, pp. 353–88.
(1933b), Interregional and International Trade, Cambridge, MA: Harvard University Press; revised edition published by Harvard University Press in 1967.
(1937), ‘Some Notes on the Stockholm Theory of Savings and Investment: I and II’, Economic Journal, 47, March, pp. 53–69 and June, pp. 221–40.