Rybczynski's Theorem in the Heckscher-Ohlin World -- Anything Goes
Abstract
We demonstrate that Rybczynski's classic comparative statics can be reversed in a Heckscher-Ohlin world when preferences in each country favor the exported commodity. This taste bias has empirical support. An increase in the endowment of a factor of production can lead to an absolute curtailment in the production of the commodity using that factor intensively, and an absolute expansion of the commodity using relatively little of the same factor. This outcome - which we call "Reverse Rybczynski" - implies immiserizing factor growth. We present a simple analytical example that delivers this result with unique pre- and post-growth equilibria. In this example, production occurs within the cone of diversification, such that factor price equalization holds. We also provide general conditions that determine the sign of Rybczynski's comparative statics.Download Info
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Bibliographic Info
Article provided by Elsevier in its journal Journal of International Economics.
Volume (Year): 79 (2009)
Issue (Month): 1 (September)
Pages: 137-142
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Web page: http://www.elsevier.com/locate/inca/505552
Related research
Keywords: Rybczynski theorem Heckscher-Ohlin Factor endowments Immiserizing growth Transfer paradox;References
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Peter H. Egger & Maximilian von Ehrlich & Douglas R. Nelson, 2012.
"Migration and Trade,"
The World Economy,
Wiley Blackwell, vol. 35(2), pages 216-241, 02.
- Peter Egger & Maximilian Von Ehrlich & Douglas R. Nelson, 2011. "Migration and Trade," CESifo Working Paper Series 3467, CESifo Group Munich.
- James A. Robinson & Ragnar Torvik, 2011. "Institutional Comparative Statics," NBER Working Papers 17106, National Bureau of Economic Research, Inc.
- Bjarne S. Jensen, 2011. "Comparative Costs, the Invisible Hand, and Factor Endowments: Ricardo, Ohlin, and Samuelson," DEGIT Conference Papers c016_042, DEGIT, Dynamics, Economic Growth, and International Trade.
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