Rybczynski Theorem

The Rybczynski theorem was developed in 1955 by the Polish-born English economist Tadeusz Rybczynski (1923–1998). The theorem states: At constant relative goods prices, a rise in the endowment of one factor will lead to a more than proportional expansion of the output in the sector which uses that factor intensively, and an absolute decline of the output of the other good.

In the context of the Heckscher–Ohlin model of international trade, open trade between regions means changes in relative factor supplies between regions, that can lead to an adjustment in quantities and types of outputs between those regions, that would return the system toward equality of production input prices like wages across countries (the state of factor price equalization).