What is Leontief’s Theorem all about?? Explain!
International trade provided many theories to explain which country should export what and which country should import what.
One of these theories is H-O international trade model, the Heckscher-Ohlin theorem gave a generalisation that the capital-abundant counties tend to export capital-intensive goods, while labour- abundant countries tend to export the labour- intensive goods.
Now, Leontief's theorem is about the paradox he found in this trade theory of Heckscher-Ohlin. Leontief said that capital-abundant countries export labour- intensive goods and labour-abundant countries export capital-intensive goods. This proposition made by Leontief is after he tested the H-O theory practically.
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