Leontief Paradox

Definition

The finding of Leontief (1954) that U.S. imports embodied a higher ratio of capital to labor than U.S. exports. This was surprising because it was thought that the U.S. was capital abundant, and theHeckscher-Ohlin Theorem would then predict that U.S. exports would be relatively capital intensive.

Use Leontief Paradox in a sentence

You should try and do some research on the leontief paradox and see if there is anything that you can learn from it.

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Based on the Leontief paradox, they found that the imports that were being brought in by the US, had a higher capital to labor ratio than their exports.

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Due to the Leontief Paradox, it is more cost effective for the company to import steel, at a cheaper cost, to use on domestic products than to try to import those products to another country.

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