The Leontief paradox
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If factor-intensity reversals were indeed prevalent in the real world, how might this fact be used to explain the Leontief paradox? If this explained the paradox, would it suggest that any given U.S. trading partner stood a better chance of conforming to Heckscher-Ohlin than did the United States (i.e., will a factor intensity reversal yield "incorrect" H-O results for both countries)? Why or why not?
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Solution Summary
The Leontief paradox as it relates to to factor-intensity reversals.
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The Leontief paradox describes data gathered on US imports and exports which violates the H-O theorem. According the the H-O theorem, countries with abundant capital should export capital-intensive goods while countries with abundant labor ...
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