Leonteif paradox presentation
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Transcript of Leonteif paradox presentation
THE LEONTIEF PARADOX THEORY
PRESENTED BY:
ASWADI BIN ISMAIL
NORHASHIMAH BINTI ISMAIL
JUWAIRIAH SHARIF
NUR ASILAH SALIM
(1905~1999)
Russian-American economist notable for his research on how
changes in one economic sector may have an effect on other
sectors
With three of his doctoral students Paul Samuelson, Robert
Solow, Vernon L. Smith
won the Nobel Committee's Nobel Memorial Prize in Economic
Sciences in 1973
to test the Hecksher – Ohlin theoryempirically. In 1954, Leontief found that
the United States the most capital abundant country in
the worldexported labor-intensive goods and imported capital-intensive goods, in contradiction with Hecksher – Ohlin
theory ("H–O theory").the finding that was contrary with the
prediction called paradox
1947, US endowed more capital intensive goods than other country.
HO theory predict that US export would required more capital intensive goods than US import labour intensive
goods
Leontief surprise the world with discovering that US import 30% more capital intensive good than US export
Wassily W. Leontief done 2 test :the first Empirical Test of the HO theory
Leontief's Second Test
1971, Professor Robert Baldwin continue the study with Baldwin's Third Test
Leontief : US more efficient
argued that US workers may be more efficient than foreign
workers
U.S. workers were three times as effective as foreign
workers.
US had special advantage in producing new products or goods
made with innovative technology
Us tend to be highly skilled, able to produce labour intensive
product which required highly skilled labour inputs
The Leontief paradox questioned the validity of the theory of:
a. Comparative advantageb. Factor endowmentsc. Overlapping demandsd. Absolute advantage
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The Leontief Paradox states that:
A)the US exports are less capital intensive than US imports.
B)the US exports are more capital intensive than US imports.
C)the US exports are usually in balance with US imports.
D)the US exports are not a factor with US imports.