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The article discusses the Heckscher-Ohlin theorem, the Leontief paradox and patterns of economic growth. The core of the Heckscher-Ohlin theorem of the nature of trade patterns is the explanation of the relation between factor endowments and the doctrine of comparative costs. The theorem asserts that a country exports those commodities produced with relatively large amounts of the country's relatively abundant factor. Thus a capital rich country exports capital intensive products. Wassily Leontief applied the theorem to upset the popular notion that the U.S. exports capital intensive commodities. Leontief's input-output data show that America imports capital intensive commodities compared with American export goods. The output ratio of the capital intensive commodity would be higher in the capital abundant country than in the labor abundant country at a common factor price ratio. The relation of the closed economy commodity price ratios between the two countries depends upon demand conditions as well as factor endowment ratios and technological conditions.

This article presents an empirical test on comparative cost theories. The tests are undertaken for three pairs of countries: Japan and the U.S., Peru and the U.S. and the Great Britain and the U.S. Although the choice of countries is determined by the availability of the relevant data, the coverage is interesting since the countries involved are at different levels of economic development, have different relative factor prices and due to differences in their geographical location, are likely to have different endowments of particular natural resources. The main finding of the tests discussed in this paper is that comparative costs can be explained in terms of the combined influence of the causal factors stressed in the Ricardian and Heckscher-Ohlin theories, even though neither theory gives satisfactory results when considered independently of the other.