国际贸易ch7.pptVIP

7.1 Growth of Factor of production 7.2 Technology progress 7.3 Growth and Trade: Small Country Case 7.4 Growth and Trade: Large country Case   7.1 Growth of Factors of production Some examples of growth of factors Changes in natural resources Changes in labor resources 7.1.1 Labor Growth and Capital Accumulation An increase in the endowment of labor and capital over time causes the nation’s production frontier to shift outward. The type and degree of the shift depend on the rate at which L and K grow. If L and K grow at the same rate, the nation’s production frontier (before and after factor growth) will be the same at any point where they are cut by a ray from the origin. This is the case of balanced growth. 7.1.2 The Rybczynski Theorem The Rybczynski theorem postulates that at constant commodity prices, an increase in the endowment of one factor will increase by a greater proportion the output of the commodity intensive in that factor and will reduce the output of the other commodity. 7.2 Technical Progress 7.2.1 The Types of Hicksian Technical progress Neutral technical progress increases the productivity of L and K in the same proportion, so that K/L remains the same after the neutral technical progress as it was before at unchanged relative factor prices (w/r). That is, with unchanged w/r, there is no substitution of L of K in production so that K/L remains unchanged. All that happens is that a given output can now be produced with less L and less K. 7.2.2 Technical progress and Nation’s production Frontier Labor-saving technical progress increases the productivity of K proportionately more than the productivity of L. As a result, K is substituted for L in production and K/L rises at unchanged w/r. Since more K is used per unit of L, this type of technical progress is called labor saving. Note that a given output can now be produced with fewer units of L and K but with a higher K/L. 7.2.2 Technical progress and Nati