Empirical Evidence on the Heckscher-Ohlin Model
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Questions and Answers

What is the essence of the Heckscher-Ohlin model?

  • Trade is driven by differences in currency exchange rates.
  • Trade is driven by differences in population size across countries.
  • Trade is driven by differences in factor abundance across countries. (correct)
  • Trade is driven by differences in political ideologies across countries.

    • What does the Heckscher-Ohlin model predict about goods trade across countries?

  • Goods trade should be independent of any factors.
  • Goods trade should only focus on currency exchange rates.
  • Goods trade should embody factor differences. (correct)
  • Goods trade should ignore factor differences.

    • Why is the empirical success of testing the Heckscher-Ohlin model limited?

  • Due to factors that have no impact on the prediction for factor-price equalization.
  • Due to factors that enhance the prediction for factor-price equalization.
  • Due to factors that support the prediction for factor-price equalization.
  • Due to factors that undermine the prediction for factor-price equalization. (correct)

    • What is a way to improve the predictive success for the factor content of trade according to the text?

    <p>Relaxing the assumptions generating factor-price equalization.</p> Signup and view all the answers

    In what way was the United States considered a special case among countries discussed in the text?

    <p>The United States was much wealthier than other countries.</p> Signup and view all the answers

    What did economist Wassily Leontief find in his 1953 study?

    <p>U.S. exports were less capital-intensive than U.S. imports.</p> Signup and view all the answers

    Based on the information provided, why was the result of the Leontief paradox surprising?

    <p>The United States was expected to be an exporter of capital-intensive goods.</p> Signup and view all the answers

    What does the text suggest about the types of products the United States tended to export?

    <p>Products requiring more engineers per unit of sales.</p> Signup and view all the answers

    In the study by Bowen, Leamer, and Sveikauskas, how did they assess a country's factor abundance?

    <p>By comparing a country's factor endowment with its share of world GDP.</p> Signup and view all the answers

    Why is the concept of factor content of trade important in understanding a country's trade patterns?

    <p>It helps identify a country's comparative advantage in certain goods.</p> Signup and view all the answers

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