As a result of the debates on factor endowment that are created by Leontief Paradox, new theories have been produced since 1960s in order to explain international trade.
Skilled-Labor Theory: Authors like Keesing and Kenen point that most part of the international trade between industrialized countries can be explained by the differences in skilled-labor. According to the theory, countries that are abounding in vocational or skilled-labor in some specific sectors mostly specialize in the production of goods that require these features. On the other hand, countries that have unskilled labor abundantly have advantages in the production of goods that requires unskilled labor.
Technology-Gap Theory: The theory that emphasizes the imitation process was suggested by Posner in 1961. According to the theory the countries that invent a new good or production process become the first exporter of that good. In the course of time after technology transfers, imitation or the end of property rights the good is produced by other countries and because of low labor costs and natural resource advantages these countries produce with lower costs than the innovator country. In this way the good starts to be exported by less-developed countries. The innovator country imports it as she can not compete with these countries. Best example for the case is that once the number 1 exporter of textile, United Kingdom is now a net exporter of textiles.
Product Life Cycle Theory: Theory which emphasizes standardization process was developed by Vernon in 1966 and is a generalized and enhanced version of the technology-gap theory. As mentioned in the theories of FDI part, it has 5 stages and the innovator country that invents a new product and standardizes it becomes a net importer at the end of fifth stage. In other words, product life cycle theory tires to explain dynamic comparative advantage for the new product and production process instead of the static comparative advantage explanation of Heckscher-Ohlin model.
