Question

U.S. exports are less capital-intensive than U.S. imports, despite the relative abundance of capital in the country. This is in opposition to the Heckscher-Ohlin theory and has been labelleda. a zero-sum game.b. Leontief's paradox.c. a positive-sum game.d. Samuelson's critique.e. a first-mover advantage.

Answer 1

The correct answer is option b.

Step-by-step explanation:

According to the Heckscher-Ohlin theory, a capital abundant country specializes in capital intensive goods. Thus it produces capital intensive goods and exports them, and imports labor-intensive good.

But this does not prove right in the case of the US. Being a capital intensive country it imports capital intensive goods and exports labor-intensive goods.

This was proved by W. Leontief through empirical evidence. Thus, it is called the Leontief paradox.