Factor Accumulation and Technological Progress in Inter-Industry Trade

Abstract

In the context of the inter-industry trade models we have met in the earlier chapters, a country grows if its production-possibility curve moves outwards. The obvious sources of such economic growth are an increase in the country’s endowment of one (or more) of the factors of production, and an improvement in the technology with which one or both goods are produced. We shall examine both these possibilities later in this chapter, considering in particular the effects on welfare and the rewards to factors of production.