The Leontief Paradox

The Leontief Paradox is an economic observation made by economist Wassily Leontief in the 1950s. It challenged the then-common belief that countries abundant in capital (money, machinery, etc.) would predominantly export capital-intensive goods and import labor-intensive ones. Surprisingly, he found that the United States, a capital-rich country, exported more labor-intensive products and imported more capital-intensive goods. This contradicted expectations and prompted economists to reconsider simple theories of international trade, highlighting that factors like technology, productivity, and human skills also play crucial roles in what countries export and import.