Leontief Paradox Explored A New Trade Pattern When Countries Have Different Technologies

Baoping Guo

MPRA Paper from University Library of Munich, Germany

Abstract: The trade pattern can be counted as the number one topic for international economics. Based either on the concept of Trefler’s effective factor endowments (Trfler, 1993) or on the concept of Fisher and Marshall’s virtual factor endowments (Fisher and Marshall, 2008), the trade pattern described by Leontief tests is right. This paper demonstrates that there are three trade patterns: the Heckscher-Ohlin trade, the Leontief trade, and the factor conversion trade (or one-side Leontief trade) when countries have different technologies. Methodologically, the popular sign predictions in empirical studies include both the Leontief trade and the Heckscher-Ohlin trade. Therefore, the sign predictions’ results cannot be used to reject the Leontief paradox. The factor conversion trade occurs when a model is with the existence of factor intensity reversals (FIRs). Many studies have demonstrated evidence of the factor intensity reversals (FIRs). They mean the Leontief trade. Another new finding is that the Leontief trade can occur when FIRs do not present.

Keywords: Heckscher-Ohlin-Ricardo model; Heckscher-Ohlin Trade; Leontief Trade; and Conversion Trade; factor content of trade; Leontief Paradox. (search for similar items in EconPapers)
JEL-codes: A2 F1 F10 F15 (search for similar items in EconPapers)
Date: 2015-12, Revised 2019-11
References: View references in EconPapers View complete reference list from CitEc
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https://mpra.ub.uni-muenchen.de/96929/1/MPRA_paper_96929.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/108166/1/MPRA_paper_108166.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/112433/8/MPRA_paper_112433.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/113003/1/MPRA_paper_113003.pdf revised version (application/pdf)

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