Explain why?
Exmpalin why the Leontief paradox and the more recent Bowen, Leamer, and Sveikauskas results reported in the text contradict the factor-proportions theory.
Answer:
First off..I am by no means proficient in economics, so please double check my interpretation before using it as an answer for any sort of grade in class!
In my opinion, the Leontief paradox was basically saying that a nation should benefit by exporting what they have in excess, the U.S. having excesses in capital, but his studies found the opposite to be true.
The Bowen, Learner, and Sveikauskas Multicountry, Multifactor Tests of the Factor Abundance Theory analized data on 27 countries and 12 factors in 1967. By measuring from different sources, they found that the net exports of a factor did not correlate to excess supplies of a factor. They blame the error of the factor-proportions theory on inadequate value placed on nonproportional consumtion and technological differences in countries.
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Answer:
First off..I am by no means proficient in economics, so please double check my interpretation before using it as an answer for any sort of grade in class!
In my opinion, the Leontief paradox was basically saying that a nation should benefit by exporting what they have in excess, the U.S. having excesses in capital, but his studies found the opposite to be true.
The Bowen, Learner, and Sveikauskas Multicountry, Multifactor Tests of the Factor Abundance Theory analized data on 27 countries and 12 factors in 1967. By measuring from different sources, they found that the net exports of a factor did not correlate to excess supplies of a factor. They blame the error of the factor-proportions theory on inadequate value placed on nonproportional consumtion and technological differences in countries.
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