Question

What is the Leontief paradox? Describe the factors that have been found to resolve it?

Answer 1

The heckscher ohlin model proposed that a country which is relatively labor abundant will export relatively labour intensive goods and vice versa. However Leontief found that US being relatively capital abundant were exporting relatively labour intensive goods contrary to HO model.

The most important resolution is that the goods which were labour intensive, as considered by Leontief, were actually capital intensive if the humna capital embodied in them were considered.