effect. Perfect internal competition Neither labor nor capital has the power to affect prices or factor rates by constraining supply; a state of perfect competition exists. Conclusions The results of this work has been the formulation of certain named conclusions arising from the assumptions inherent in the model. Heckscher–Ohlin theorem Exports of a capital-abundant country come from capital-intensive industries, and labour-abundant countries import such goods, exporting labour-intensive goods in return. Competitive pressures within the H–O model produce this prediction fairly straightforwardly. Conveniently, this is an easily testable hypothesis. Rybczynski theorem When the amount of one factor of production increases, the production of the good that uses that particular production factor intensively increases relative to the increase in the factor of production, as the H–O model assumes perfect competition where price is equal to the costs of factors of production. This theorem is useful in explaining the effects of immigration, emigration, and foreign capital investment. However, Rybczynski suggests that a fixed quantity of the two factors of production are required. This could be expanded to consider factor substitution, in which case the increase in production is more than proportional. Stolper–Samuelson theorem Relative changes in output goods prices drive the relative prices of the factors used to produce them. If the world price of capital-intensive goods increases, it increases the relative rental rate and decreases the relative wage rate (the return on capital as against the return to labor). Also, if the price of labor-intensive goods increases, it increases the relative wage rate and decreases the relative rental rate. Factor–price equalization theorem Free and competitive trade makes factor prices converge along with traded goods prices. The FPE theorem is the most significant conclusion of the H–O model, but also has found the least agreement with the economic evidence. Neither the rental return to capital, nor the wage rates seem to consistently converge between trading partners at different levels of development. Implications of factor-proportion changes The Stolper–Samuelson theorem concerns nominal rents and wages. The Magnification effect on prices considers the effect of output-goods price-changes on the real return to capital and labor. This is done by dividing the nominal rates with a price index, but took thirty years to develop completely because of the theoretical complexity involved. The Magnification effect shows that trade liberalization actually makes the locally-scarce factor of production worse off (because increased trade makes the price index fall by less