• How does the Léontif paradox challenge the overall applicability of the factor endowment model? To understand how the Léontif paradox challenges the Overall applicability of factor endowment theory, you must first understand what factor endowment theory states. Factor endowment theory states that trade between nations is based on the difference in price of products before exchange. The prices of products before marketing depend on production possibilities. Production possibilities can be linear as under conditions of constant costs or curved as under conditions of increasing costs. Based on unit cost, a country will specialize in producing a product for which it has a comparative cost advantage. According to factor endowment theory, a nation will export the product for which a large amount of relatively abundant resources are available. used, whether labor, raw materials or capital. It will import the product in the production of which a relatively scarce resource is used (Carbaugh 68). Thus, countries with large populations representing cheap, unskilled labor will export manufactured goods that they can produce more cheaply. A nation with abundant capital but more expensive labor will export products that require more skilled labor that other nations cannot produce at a reasonable cost. “Following the development of factor endowment theory, little empirical evidence has been provided regarding its validity. » (Carbaugh 68). For some economists, such generalizations were sufficient to illustrate the validity of factor endowment theory, but others required stronger evidence (Carbaugh 79). In 1954, Wassily Leontief was the first to attempt to test the theory of factor endowment with real data. It was well known that the medium of paper was a commodity. According to the World Trade Organization's 2013 international trade statistics, between 2005 and 2012, Asia's global exports of manufactured goods increased from 31.7% to 38.5%, while those of America of the North decreased from 15.1% to 13.8% (WTO 80). Granted, this is for manufactured goods as a whole rather than by product, but it represents a trend in manufactured goods where Asia's exports are increasing while North America's are decreasing. This indicates that manufacturing continues to shift from North America to Asia. Works Cited Carbaugh, Robert J., “International Economics,” 12th ed., Mason, OH: Thomson South-Western, part of Thomson Corporation, 2009. “International Trade Statistics 2013,” World Trade Organization, (2013) , p 80, Web. 01/17/2014,