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Rybczynski's Theorem in the Heckscher-Ohlin World -- Anything Goes

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Author Info

  • Opp, Marcus M.
  • Sonnenschein, Hugo F.
  • Tombazos, Christis G.

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.

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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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Handle: RePEc:eee:inecon:v:79:y:2009:i:1:p: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;

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Cited by:
  1. Peter Egger & Maximilian Von Ehrlich & Douglas R. Nelson, 2011. "Migration and Trade," CESifo Working Paper Series 3467, CESifo Group Munich.
  2. Sebastian Benz & Mario Larch & Markus Zimmer, 2013. "The Structure of Europe:International Input-Output Analysis with Trade inIntermediate Inputs and Capital Flows," Ifo Working Paper Series Ifo Working Paper No. 161, Ifo Institute for Economic Research at the University of Munich.
  3. James A. Robinson & Ragnar Torvik, 2011. "Institutional Comparative Statics," NBER Working Papers 17106, National Bureau of Economic Research, Inc.
  4. 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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