Third, the effects of trade are not considered in the theory. According to the Hecksher-Ohlin trade theory, under free trade countries would tend to specialize on economic activities that the country has abundant resource on. Thus, developed countries would concentrate on labor and service production while developing countries would put emphasis on human capital and manufactured capital-intensive activities. As such, this might explain for the further degradation of environment of the latter, while improvement for the former. Lastly, stringent environmental policies of the developed countries might lead to polluting activities gravitating towards developing countries. As a.
