Leontief paradox

The empirical finding that U.S. exports appeared more labor-intensive than its imports, contrary to the prediction that a capital-abundant country exports capital-intensive goods.

Heckscher–Ohlin model: A trade theory predicting that countries export goods using their abundant factors intensively. Its prediction that U.S. exports would be capital-intensive is the benchmark Leontief tested.
Wassily Leontief: A Russian-American economist who developed input-output analysis and tested trade theory with U.S. data. His 1953 study reported the finding now known as the Leontief paradox.
Human capital: The productive capacities acquired through education, training, health, and experience. Treating skilled labor as embodied human capital can change how labor intensity is measured.
Leontief’s 1953 paper: Wassily Leontief’s empirical study, “Domestic Production and Foreign Trade: The American Capital Position Re-examined.” It presented the U.S. factor-content result that challenged the simple model prediction.
Factor intensity: The relative amounts of production factors, such as labor and capital, used to make a good. Leontief compared labor and capital embodied in exports and competing imports.
U.S. input-output table: A statistical table recording transactions among industries in an economy. Leontief used the 1947 table to calculate labor and capital requirements in U.S. production.
Skilled labor: Workers whose jobs require substantial education, training, or specialized expertise. U.S. exports may embody more skilled labor even when their total labor content seems high.
Factor-intensity reversal: A condition in which the relative factor intensities of two goods differ across countries or factor prices. It offered a way for trade patterns to depart from simple Heckscher–Ohlin predictions.
Input-output analysis: A method that traces how industries use inputs from one another to produce goods and services. Leontief used U.S. input-output tables to estimate the factor requirements of trade.
The Structure of American Economy, 1919–1929: Wassily Leontief’s 1941 book applying input-output analysis to the structure of the U.S. economy. It established the analytical method later used to examine the factor content of U.S. trade.

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