Rybczynski theorem

In the two-good, two-factor Heckscher–Ohlin model, an increase in one factor endowment raises production of the good that uses it intensively and reduces production of the other good.

Heckscher–Ohlin model: A trade model explaining comparative advantage through differences in countries’ factor endowments. Its two-good, two-factor setting supplies the assumptions behind the theorem.
Comparative advantage: The ability to produce a good at a lower opportunity cost than another producer. The theorem belongs to a trade framework that explains comparative advantage through factor abundance.
Tadeusz Rybczynski: A Polish-born British economist known for a theorem on factor endowments and production in international trade. He published the result that bears his name in 1955.
Dutch disease: A decline in other tradable sectors that can follow a boom in a resource-exporting sector. A resource windfall can shift production toward the booming sector, resembling the theorem’s endowment mechanism.
Factor price equalization: The prediction that free trade can equalize factor prices across countries under restrictive conditions. It shares the model’s fixed-goods-price logic and highlights how demanding its assumptions are.
Factor intensity: A comparison of how much of one production factor industries use relative to another. The theorem’s direction depends on which good uses the changing factor more intensively.
Factor endowment: The quantity of a production factor, such as labor or capital, available to an economy. A change in one endowment is the theorem’s initiating change.
Heckscher–Ohlin theory: A theory that explains trade patterns through differences in countries’ relative factor endowments. Rybczynski’s result extends the factor-proportions framework to changes in available resources.
Immigration: The movement of people into a country to live there. In a model treating labor as a factor, immigration can change labor endowment and alter sectoral output.
Empirical trade analysis: The use of data to test explanations and consequences of international trade. Testing the theorem requires identifying endowment changes and separating them from price and technology shifts.

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Bertil OhlinRelated: It applies the model to the production effects of changing national resources.