Leontief Paradox

Discipline: Economics

Russian-born economist Wassily Leontief (1906-1999) devised this contradiction of the Heckscher-Ohlin trade theory.

Trade is determined by the relative abundance of factors of production in each economy. Leontief discovered that despite the USA being endowed with an abundance of capital, its exports were labor intensive and imports capital intensive.

Also see: factor-price equalization theorem, rybczynski theorem

Source:
W W Leontief, 'Domestic Production and Foreign Trade: The American Capital Position Re-examined', Proceedings of the American Philosophical Society, vol. XCVII (September, 1953), 332-49

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