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2020/9/15 16 Factor Growth, Trade, and Welfare (2) 2020/9/15 17 Economic Growth and International Trade ? Introduction ? Growth of factors of production ? Technical progress ? Growth and trade: a SmallCountry case ? Growth and trade: a LargeCountry case 2020/9/15 18 Growth and the Nation39。 Economic Growth and International Trade 2020/9/15 2 Economic Growth and International Trade ? Introduction ? Growth of factors of production ? Technical progress ? Growth and trade: a SmallCountry case ? Growth and trade: a LargeCountry case 2020/9/15 3 Labor Growth and Capital Accumulation Over Time balanced growth: L and K double, X and Y double. unbalanced growth: Only L doubles, X grows less than doubles 2020/9/15 4 The Rybczynski Theorem ? At constant modity prices, an increase in the endowment of one factor will increase by a greater proportion the output of the modity intensive in that factor and will reduce the output of the other modity. X: Lintensive Y: Kintensive Only L growth Full employment X rises Y declines constant modity prices constant factor prices constant K