Chapter 9

Question 1

The first empirical test of the Heckscher-Ohlin model was conducted by

Answer 1

Wassily Leontief

Question 2

When was the first empirical test of the Heckscher-Ohlin model conducted

Answer 2

1951

Question 3

Wassily Leontief conducted the first empirical test of the Heckscher-Ohlin mode using data from

Answer 3

The U.S for the year 1947

Question 4

Why Leontief expected to find that the US exported K-intensive commodities and imported L-intensive commodities

Answer 4

Since the United States was the most K-abundant nation in the world

Question 5

What did Leontief utilise for his test to calculate the amount of labor and capital in U.S. exports and import substitutes for the year 1947

Answer 5

The input-output table of the U.S economy

Question 6

The results of Leontief’s test were

Answer 6

U.S. import substitutes were about 30% more K-intensive than U.S. exports

Question 7

How the results of Leontief’s test was opposing the H-O model prediction

Answer 7

The US seemed to export
L-intensive commodities and import K-intensive commodities

Leontief Paradox

Question 8

Leontief tried to rationalize his results by saying

Answer 8

U.S labor was about three times as productive as foreign labor, the U.S was really an L-abundant nation if we multiplied the U.S. labor force by three

Question 9

Why leontief’s explanation of his results was regarded as inacceptable

Answer 9

While U.S. labor was definitely more productive than foreign labor (though the multiple of three used by Leontief was largely arbitrary), so was U.S. capital

U.S. labor and capital should be multiplied by about the same multiple

Question 10

Another leontief explanation of his results was

Answer 10

That U.S.tastes were biased so strongly in favor of K-intensive commodities as to result in higher
relative prices for these commodities in the United States

Question 11

Why leontief’s explanation of diffrent tastes doesnt persue

Answer 11

Tastes are known to be similar across nations

Question 12

A more general source of bias is that Leontief used

Answer 12

a two-factor model (L & K)

Question 13

Leontief using the two-factor model lead to

Answer 13

abstracting from other factors such as natural resources

Question 14

The most important source of bias was the fact that Leontief included in his measure of capital only

Answer 14

Physical capital (such as machinery) and completely ignored human capital

Question 15

Human capital refers to

Answer 15

The education, job
training

Question 16

How was the U.S. tariff policy another source of bias in the Leontief study.

Answer 16

In 1956, a study found that the most heavily protected industries in the U.S. were the L-intensive industries. This biased the pattern of trade and reduced the labor intensity of U.S. import substitutes

Question 17

A Tarrif aims to

Answer 17

reduce imports and stimulates the domestic production of import substitutes.