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Leontief was not right after all

Author

Listed:
  • Eric O’N. Fisher

    (California Polytechnic State University)

  • Kathryn G. Marshall

    (University of California at Riverside)

Abstract

We use recent international data on cost shares by industry to conduct the first robust test of Leontief’s hypothesis of factor-specific productivity differences. We strongly reject this hypothesis. Hence tests of the Heckscher–Ohlin–Vanek paradigm cannot be based upon simple modifications that define factors in efficiency units. We also discuss a theory of productivity differences that describes the factor content of trade well.

Suggested Citation

  • Eric O’N. Fisher & Kathryn G. Marshall, 2016. "Leontief was not right after all," Journal of Productivity Analysis, Springer, vol. 46(1), pages 15-24, August.
    • Handle: RePEc:kap:jproda:v:46:y:2016:i:1:d:10.1007_s11123-016-0466-2
    DOI: 10.1007/s11123-016-0466-2
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    References listed on IDEAS

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    1. Thijs ten Raa & Pierre Mohnen, 2009. "The Location of Comparative Advantages on the Basis of Fundamentals Only," World Scientific Book Chapters, in: Input–Output Economics: Theory And Applications Featuring Asian Economies, chapter 23, pages 425-446, World Scientific Publishing Co. Pte. Ltd..
    2. Donald R. Davis & David E. Weinstein, 2001. "An Account of Global Factor Trade," American Economic Review, American Economic Association, vol. 91(5), pages 1423-1453, December.
    3. Peter K. Schott, 2003. "One Size Fits All? Heckscher-Ohlin Specialization in Global Production," American Economic Review, American Economic Association, vol. 93(3), pages 686-708, June.
    4. Eric O'N. Fisher & Kathryn G. Marshall, 2011. "The Structure of the American Economy," Review of International Economics, Wiley Blackwell, vol. 19(1), pages 15-31, February.
    5. Marshall, Kathryn G., 2012. "International productivity and factor price comparisons," Journal of International Economics, Elsevier, vol. 87(2), pages 386-390.
    6. Paul A. Samuelson, 1953. "Prices of Factors and Goods in General Equilibrium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 21(1), pages 1-20.
    7. Trefler, Daniel, 1993. "International Factor Price Differences: Leontief Was Right!," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 961-987, December.
    8. Rosefielde, Steven, 1974. "Factor Proportions and Economic Rationality in Soviet International Trade 1955-1968," American Economic Review, American Economic Association, vol. 64(4), pages 670-681, September.
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    Cited by:

    1. Kozo Kiyota, 2021. "The Leontief Paradox Redux," Review of International Economics, Wiley Blackwell, vol. 29(2), pages 296-313, May.
    2. Guo, Baoping, 2015. "Leontief Paradox Explored A New Trade Pattern When Countries Have Different Technologies," MPRA Paper 96929, University Library of Munich, Germany, revised Nov 2019.
    3. 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.
    4. Guo, Baoping, 2015. "Heckscher-Ohlin Trade, Leontief Trade, and Factor Conversion Trade When Countries Have Different Technologies," MPRA Paper 95161, University Library of Munich, Germany, revised Jul 2019.

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    More about this item

    Keywords

    Factor-specific productivity differences; Leontief conjecture; Total factor productivity; Empirical studies of trade;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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