Standard trade theory predicts that a country will export products that intensively use endowments in which a country is favored relative to the other countries and will import products that are intensive in endowments scarce in that country. It was generally believed, for example, that the United States exported capital-intensive goods and imported laborintensive ones, but empirical work showed that US exports tended to be human-capital intensive and imports capital intensive – the so-called “Leontief Paradox.”
In this paper, I investigate the Leontief Paradox in the United States for the period from 1947 to 1996. Does the Leontief Paradox continue to hold? Does it hold when we consider only equipment and machinery, and, in particular, only office and computing equipment?
A related issue regards the R&D intensity of US trade. During the 1960s and 1970s the major export strength of the United States lay in industries where research was heavily subsidized by the US government (particularly the Department of Defense), including aircraft, armaments, mainframe computers, and medical equipment (Dollar and Wolff, 1993). Is it still the case?
This paper presents statistics on the capital content of both US exports and imports from 1947 to 1996. It also contains a discussion of the relative labor costs and productivity performance of US exports and imports. Both the direct and indirect content of trade are then computed using input-output data.