Question

Will global trade make all capitalists in the U.S. exports capital-intensive good?

Answer 1

Will global trade make all capitalists in the U.S. exports capital-intensive good?

NO, that is no necessary even though U.S is a capital intensive country and has abundance of capital therefore according to the heckscher ohlin theory it should export capital intensive goods as the heckscher ohlin theory says that countries which are rich in labour will export labour intensive goods and countries which are rich in capital will export capital intensive goods. Hence as U.S. is a capital rich country should export capital intensive goods but this is not the case always, in fact, leontief paradox is a perfect example. Leontief studied the trading patterns of the US in the year 1947, it was expected that US would be trading capital intensive could but found out that U.S. was actually exporting more of labour intensive goods. And the Leontief's conclusion that the U.S. specialized in labour intensive rather than capital intensive goods contradicted the the H.O. theory. He gave many reasons for this few of them being : american labour is more efficient that the labour of other countries and the american population is more skilled hence they should not be measured in mere labour terms but in Human capital terms. And Amercian worker is more efficient than the other labour with the same amount of capital. Leontief suggested that american labour was 3 times more efficient. Also the third factor of production ie natural resources was not taken into consideration, which also determine's a countries productive capacity after including this third factor an explanation to the leontief paradox can be found. Therefore, after opening to trade it is highly likely that the capitalist in the U.S. may export capital intensive goods but this may not be true for ALL capitalists there are other factors that should be studied to come to some conclusion.