10 Questions
What is the essence of the Heckscher-Ohlin model?
Trade is driven by differences in factor abundance across countries.
What does the Heckscher-Ohlin model predict about goods trade across countries?
Goods trade should embody factor differences.
Why is the empirical success of testing the Heckscher-Ohlin model limited?
Due to factors that undermine the prediction for factor-price equalization.
What is a way to improve the predictive success for the factor content of trade according to the text?
Relaxing the assumptions generating factor-price equalization.
In what way was the United States considered a special case among countries discussed in the text?
The United States was much wealthier than other countries.
What did economist Wassily Leontief find in his 1953 study?
U.S. exports were less capital-intensive than U.S. imports.
Based on the information provided, why was the result of the Leontief paradox surprising?
The United States was expected to be an exporter of capital-intensive goods.
What does the text suggest about the types of products the United States tended to export?
Products requiring more engineers per unit of sales.
In the study by Bowen, Leamer, and Sveikauskas, how did they assess a country's factor abundance?
By comparing a country's factor endowment with its share of world GDP.
Why is the concept of factor content of trade important in understanding a country's trade patterns?
It helps identify a country's comparative advantage in certain goods.
Explore how the Heckscher-Ohlin model predicts trade based on factor abundance and how this can be tested empirically. Discover the connection between goods trade, factor differences, and the success of empirical tests in relation to this economic model.
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