Leontief Paradox

The Leontief Paradox is an unexpected finding in international economics. In the 1950s, economist Wassily Leontief expected the U.S., being capital-rich, to export more capital-heavy goods and import labor-intensive ones, following the classical trade theory. Surprisingly, he found the opposite: the U.S. exported more labor-intensive goods and imported capital-intensive ones. This contradicts standard theories and suggests other factors, like technology or product quality, influence trade patterns more than just the amount of capital and labor, challenging simple assumptions about how countries should trade based solely on resource abundance.