and others found that HOV model fitted extremely well with the regional data of Japan. Even when the HOV formula fits well, it does not mean that Heckscher–Ohlin theory is valid. Indeed, Heckscher–Ohlin theory claims that the state of factor endowments of each country (or each region) determines the production of each country (respectively of each region) but Bernstein and Weinstein found that the factor endowments have little predictive power. The factor-endowments-driven model (FED model) has errors much greater than the HOV model. No unemployment Unemployment is the vital question in any trade conflict. Heckscher–Ohlin theory excludes unemployment by the very formulation of the model, in which all factors (including labour) are employed in the production. Leontief paradox The Leontief paradox, presented by Wassily Leontief in 1953, found that the U.S. (the most capital-abundant country in the world by any criterion) exported labor-intensive commodities and imported capital-intensive commodities, contrary to the Heckscher–Ohlin theory. However, if labor is separated into two distinct factors, skilled labor and unskilled labor, the Heckscher–Ohlin theorem is more accurate. The U.S. tends to export skilled-labor-intensive goods, and tends to import unskilled-labor-intensive goods. Factor equalization theorem The factor equalization theorem (FET) applies only to the most advanced countries. The average wage in Japan was once as big as 70 times the wage in Vietnam. These wage discrepancies are not normally in the scope of the H–O model analysis. Heckscher–Ohlin theory is badly adapted to the analyze south–north trade problems. The assumptions of H–O are unrealistic with respect to north–south trade. Income differences between North and South is the concern that third world cares most. The factor price equalization theorem has not shown a sign of realization, even for a long time lag of a half century. Identical production function The standard Heckscher–Ohlin model assumes that the production functions are identical for all countries concerned. This means that all countries are in the same level of production and have the same technology, yet this is highly unrealistic. Technological gap between developed and developing countries is the main concern for the development of poor countries. The standard Heckscher–Ohlin model ignores all these vital factors when one wants to consider development of less developed countries in the international context. Even between developed countries, technology differs from industry to industry and firm to firm base. Indeed, this is the very basis of the competition between firms, inside the country and across