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Leonteif paradox presentation

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PP504 international trade

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Leonteif paradox presentation

  1. 1. THE LEONTIEF PARADOX THEORY PRESENTED BY: ASWADI BIN ISMAIL NORHASHIMAH BINTI ISMAIL JUWAIRIAH SHARIF NUR ASILAH SALIM
  2. 2. (1905~1999) Russian-American economist notable for his research on how changes in one economic sector may have an effect on other sectors With three of his doctoral students Paul Samuelson, Robert Solow, Vernon L. Smith won the Nobel Committee's Nobel Memorial Prize in Economic Sciences in 1973
  3. 3. to test the Hecksher – Ohlin theory empirically. In 1954, Leontief found that the United States the most capital abundant country in the world exported labor-intensive goods and imported capital-intensive goods, in contradiction with Hecksher – Ohlin theory ("H–O theory"). the finding that was contrary with the prediction called paradox
  4. 4. 1947, US endowed more capital intensive goods than other country. HO theory predict that US export would required more capital intensive goods than US import labour intensive goods Leontief surprise the world with discovering that US import 30% more capital intensive good than US export Wassily W. Leontief done 2 test : the first Empirical Test of the HO theory Leontief's Second Test 1971, Professor Robert Baldwin continue the study with Baldwin's Third Test
  5. 5. Leontief : US more efficient argued that US workers may be more efficient than foreign workers U.S. workers were three times as effective as foreign workers. US had special advantage in producing new products or goods made with innovative technology Us tend to be highly skilled, able to produce labour intensive product which required highly skilled labour inputs
  6. 6. OTHER COUNTRY INVOLVE :
  7. 7. Change their manufacturing plant from Example: Cheaper labour than Malaysia labour intensive
  8. 8. language skill Change back
  9. 9. POP QUIZ are you ready???
  10. 10. Based on the slide, give the full name the inventor of Leontief Paradox Theory? 1
  11. 11. In your words, explain a little bit about Leontief Paradox Theory? 2
  12. 12. The Leontief paradox questioned the validity of the theory of: a. Comparative advantage b. Factor endowments c. Overlapping demands d. Absolute advantage 3
  13. 13. 4 Based on the slide, named 3 country that also been studied by Leontief?
  14. 14. 5 The Leontief Paradox states that: A)the US exports are less capital intensive than US imports. B)the US exports are more capital intensive than US imports. C)the US exports are usually in balance with US imports. D)the US exports are not a factor with US imports.
  15. 15. Thank you.. Bye byee

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