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The Leontief Paradox Redux

Author

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  • Kozo Kiyota

    (Keio Economic Observatory, Keio University)

Abstract
Shortly after Leamer (1980) found that the Leontief Paradox was based on a simple conceptual misunderstanding, Brecher and Choudhri (1982) argued that the fact that the United States exported labor services was, in itself, paradoxical because it is true if and only if its per-capita consumption is less than the world average. Surprisingly, however, no formal answer to this paradox has been provided for nearly four decades. This paper revisits this paradox and formally shows that the paradox can be resolved if the Heckscher-Ohlin-Vanek model takes into account technology differences across countries and trade imbalance. In contrast, the paradox cannot be resolved even if the analysis takes into account quasi-homothetic preferences, the Armington home bias, or offshoring.

Suggested Citation

  • Kozo Kiyota, 2020. "The Leontief Paradox Redux," Keio-IES Discussion Paper Series 2020-018, Institute for Economics Studies, Keio University.
    • Handle: RePEc:keo:dpaper:2020-018
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    File URL: https://ies.keio.ac.jp/upload/pdf/en/DP2020-018.pdf
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    References listed on IDEAS

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    1. Head, Keith & Mayer, Thierry & Ries, John, 2009. "How remote is the offshoring threat?," European Economic Review, Elsevier, vol. 53(4), pages 429-444, May.
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    25. repec:hal:spmain:info:hdl:2441/10144 is not listed on IDEAS
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    Cited by:

    1. Baoping Guo, 2024. "Leontief Paradox vs. Leontief Trade and Localized Factor Prices vs. Localized Trade Patterns," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 30(1), pages 83-105, February.

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    More about this item

    Keywords

    Leontief Paradox; Technology differences; Trade imbalance; Nonhomothetic preferences; Armington home bias; offshoring;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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