In economics, the Leontief's paradox is that a country with a higher capital per worker has a lower capital/labor ratio in exports than in imports.
For many economists, Leontief's paradox undermined the validity of the Heckscher–Ohlin theorem (H–O) theory, which predicted that trade patterns would be based on countries' comparative advantage in certain factors of production (such as capital and labor).
For instance, both the United States and Germany are developed countries with a significant demand for cars, so both have large automotive industries.
Similarly, new trade theory argues that comparative advantages can develop separately from factor endowment variation (e.g., in industrial increasing returns to scale).
Daniel Trefler (1993) creatively extended Leontief’s idea to a factor-specific model to measure the trade pattern by effective endowments.