A 1974 empirical study (by Steven Rosefielde) found that the "Leontief statistic" for the Soviet Union in its trade with Western industrialized nations was 1.44, and its "Leontief Statistic" for its trade with developing countries was 0.43. If the Soviet Union was Trading in accordance with the Heckscher-Ohlin theorem, these results suggest that theSoviet Union was relatively __________ compared to its Western trading partners and __________ compared to developing countries.
A) capital abundant; was relatively labor abundant
B) capital abundant; also was relatively capital abundant
C) labor abundant; also was relatively labor abundant
D) labor abundant; was relatively capital abundant

Question

Quizplus · Accepted Answer

The Leontief statistic is used to determine whether a country is trading in accordance with the Heckscher-Ohlin theorem, which suggests that a country will export goods that intensively use its abundant factor of production and import goods that use its scarce factor of production.

A Leontief statistic greater than 1 suggests that the country is relatively more abundant in the factor of production that is used intensively in its exports, while a Leontief statistic less than 1 suggests that the country is relatively more abundant in the factor of production that is used intensively in its imports.

In this case, the Soviet Union has a Leontief statistic of 1.44 in its trade with Western industrialized nations, which suggests that it is relatively capital abundant compared to its Western trading partners. Additionally, the Soviet Union has a Leontief statistic of 0.43 in its trade with developing countries, which suggests that it is relatively labor abundant compared to developing countries. Therefore, the best choice is D, which states that the Soviet Union was relatively labor abundant compared to its Western trading partners and relatively capital abundant compared to developing countries.

A 1974 Empirical Study (By Steven Rosefielde) Found That the "Leontief