The Leontief Paradox

- A concept that countries with a great deal of capital available import capital
intensive commodities and export labor intensive commodities.

Possible Explanations of the Paradox:

- Statistical Error
- Factor-Intensity Reversal
- Demand Conditions
- Trade Restrictions
- Efficiency of U.S workers
- Natural Resources

Most Recent Theories of Trade

Income and Tastes

- Differences of production costs or factor prices are the bases of comparative

advantage of the traditional trade theory.

Technology

- Combination of knowledge and skills which are available for use in the
production of goods and services.

Product Life Cycle (Raymond Vernon – Economist)

- A process in which a product goes through from when it is first introduced into
the market until it declines or removed from the market.