INVESTMENT AND TRADE 201 pattern and it may be costly,but it is least disturbing to the status quo. Pieces of this hypothetical pattern are subject to empirical tests of a sort.So far,at any rate,the empirical tests have been reassur- ing.The office machinery industry,for instance,has seen repeatedly the phenomenon of the introduction of a new product in the United States,followed by United States exports,?followed still later by United States imports.(We have still to test whether the timing of the commencement of overseas production by United States sub- sidiaries fits into the expected pattern.)In the electrical and elec- tronic products industry,those elements in the pattern which can be measured show up nicely.1 A broader effort is now under way to test the United States trade patterns of a group of products with high income elasticities;and,here too,the preliminary results are encouraging.2 On a much more general basis,it is reassuring for our hypotheses to observe that the foreign manufacturing subsidiar- ies of United States firms have been increasing their exports to third countries. It will have occurred to the reader by now that the pattern envisaged here also may shed some light on the Leontief paradox.3 Leontief,it will be recalled,seemed to confound comparative cost theory by establishing the fact that the ratio of capital to labor in United States exports was lower,not higher,than the like ratio in the United States production which had been displaced by com- petitive imports.The hypothesis suggested in this paper would have the United States exporting high-income and labor-saving products in the early stages of their existence,and importing them later on.In the early stages,the value-added contribution of in- dustries engaged in producing these items probably contains an 9.Reported in U.S.Senate,Interstate and Foreign Commerce Committee, Hearings on Foreign Commerce,1960,pp.130-39. 1.See Hirsch,op.cit. 2.These are to appear in a forthcoming doctoral thesis at the Harvard Business School by Louis T.Wells,tentatively entitled"International Trade and Business Policy." 3.See Wassily Leontief,"Domestic Production and Foreign Trade:The American Capital Position Re-examined,"Proceedings of the American Philo- sophical Society,Vol.97 (Sept.1953),and "Factor Proportions and the Strue- ture of American Trade:Further Theoretical and Empirical Analysis,"Review of Economics and Statistics,XXXVIII (Nov.1956). 4.Of course,if there were some systematic trend in the inputs of new products-for example,if the new products which appeared in the 1960's were more capital-intensive than the new products which appeared in the 1950's-then the tendencies suggested by our hypotheses might be swamped by such a trend.As long as we do not posit offsetting systematic patterns of this sort,however,the Leontief findings and the hypotheses offered here seem consistent.INVESTMENT AND TRADE 201 pattern and it may be costly, but it is least disturbing to the status quo. Pieces of this hypothetical pattern are subject to empirical tests of a sort. So far, at any rate, the empirical tests have been reassur￾ing, The office machinery industry, for instance, has seen repeatedly the phenomenon of the introduction of a new product in the United States, followed by United States exports: followed still later by United States imports. (We have still to test whether the timing of the commencement of overseas production by United States sub￾sidiaries fits into the expected pattern.) In the electrical and elec￾tronic products industry, those elements in the pattern which can be measured show up nice1y.l A broader effort is now under way to test the United States trade patterns of a group of products with high income elasticities; and, here too, the preliminary results are enco~raging.~On a much more general basis, it is reassuring for our hypotheses to observe that the foreign manufacturing subsidiar￾ies of United States firms have been increasing their exports to third countries. It will have occurred to the reader by now that the pattern envisaged here also may shed some light on the Leontief para do^.^ Leontief, it will be recalled, seemed to confound comparative cost theory by establishing the fact that the ratio of capital to labor in United States exports was lower, not higher, than the like ratio in the United States production which had been displaced by com￾petitive imports. The hypothesis suggested in this paper would have the United States exporting high-income and labor-saving products in the early stages of their existence, and importing them later In the early stages, the value-added contribution of in￾dustries engaged in producing these items probably contains an 9. Reported in US. Senate, Interstate and Foreign Commerce Committee, Hearings on Foreign Commerce, 1960, pp. 13039. 1. See Hirsch, op. cit. 2. These are to appear in a forthcoming doctoral thesis at the Harvard Business School bv Louis T. Wells. tentatively entitled" International Trade and Business ~olicy." 3. See Wassily Leontief, "Domestic Production and Foreign Trade: The American Capital Position Re-examined," Proceedings of the American Philo￾sophical Society, Vol. 97 (Sept. 1953), and "Factor Proportions and the Struc￾ture of American Trade: Further Theoretical and Empirical Analysis," Review of Economics and Statistics, XXXVIII (Nov. 1956). 4. Of course, if there were some systematic trend in the inputs of new products-for example, if the new products which appeared in the 1960's were more capital-intensive than the new products which appeared in the 1950's- then the tendencies suggested by our hypotheses might be swamped by such a trend. As long as we do not posit offsetting systematic patterns of this sort, however, the Leontief findings and the hypotheses offered here seem consistent