Rybczynski Theory

Rybczynski theory states that a country’s productive capacity increases as labour and capital resources increase over time. This is sometimes referred to as the principle of the accumulated good. Different countries are affected by different externalities. For example, factors such as war, revolutions, and forced restructuring of the economy have negative consequences for the growth of labour and capital resources. For instance, countries occupied by other countries or where communism is introduced often experience the nationalisation of private property.

Ex. 1‑24 Tadeusz Rybczynski theorem on accumulation of productivity factors

Keywords: accumulation of factors, country development, productivity factors

Ex. 1‑25 Tadeusz Rybczynski theorem in the context of other significant events

Keywords: II World War, development of countries

The chapter explains why and how long-term resource accumulation occurs in a country by Rybczynski theory. It describes why some countries accumulate more resources than others. The chapter explains why the accumulation of resources can lead to changes in a country’s industrial structure.

According to Rybczynski’s theorem, balanced growth is also possible when capital and labour resources accumulate at the same rate and to the same extent so that a country’s productive capacity grows as a result but is not redistributed between capital-intensive and labour-intensive industries.

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