Chapter 7 Growth and Trade Link to syllabus Chapter 7 Growth and Trade

Figure 7.1 page 123 Balanced and biased growth Terms, balanced growth, biased toward exports or imports (or wheat/cloth).

Figure 7.2 page 125. The Rybczynski theorem Two good world, constant product prices, an increase in endowment of one factor results in: An increase in the output of the good intensively using that factor, and a decrease in the output of the other good. (Footnote page 114 lists other assumptions: country continues to produce both goods, constant technology, factors are mobile and full employment.) Similar to Dutch disease. Claim this hurt US production of natural resources in early 1800s.

Figure 7.2 p. 125. Single-Factor Growth: The Rybczynski Theorem

Figure 7.3 page 129 Growth biased toward replacing imports in a large country Growth can affect relative price of large country. Note which relative price change is favorable.

Figure 7.4, p. 130. Immisersing Growth in a Large Country

Product Cycle: from Salvatore textbook Product cycle.mentioned p. 121 Raymond Vernon. My argument that cycles are getting shorter. (Textiles, cars, computers, cellulars) Book argues that cycles are unpredictable, recognizes role of MNEs in cycles. Issue of policy to encourage innovation/imitation. Diffusion may be increasing due to better communications, fewer restrictions, MNEs. Is the decline in (non-skilled) wages [increased wage inequality] in the U.S. a result of expansion of free trade? Book argues it is technology. Prices of labor intensive goods are not falling relative Most industries became more intensive in their use of skilled labor. Suggestion that technological progress has been more important in skilled labor industries Data look similar in U.K., less so in rest of Europe, Canada. No conversation about higher savings/investment propensities among certain activities (industry versus farm). Discussed – without a graph – on +page 133 of Pugel text.

Indian Cotton Textiles as an Example of Product Cycles. 1800-1930 Yarn (million pounds) Cloth (million yards) Indian Cotton Textiles as an Example of Product Cycles. 1800-1930 For details, go to Explorations in Economic History 1983, pp. 37-57