Rybczynski Theory

The section explains why and how long-term resource accumulation occurs in a country. It describes why some countries accumulate more resources than others. It also explains why the accumulation of resources can lead to changes in a country’s industrial structure.
Rybczynski’s theorem (Rybczynski, 1955) states that a country’s productive capacity increases as labor and capital resources increase over time. This is sometimes referred to as the principle of the accumulated wealth. Different countries are affected by diverse externalities. For example, factors such as war, revolutions, occupation and forced restructuring of the economy have negative consequences for the growth of labor and capital resources. For instance, countries occupied by other countries or where communism is forced often experience the nationalization of private property. This directly interrupts or even wipes out the country’s capital accumulation. In addition to the direct physical effects, the destruction or loss of property in these countries creates a psychological effect which discourages one or more generations to engage in business and accumulate wealth in a market economy.
Furthermore, revolutions and wars are usually accompanied by increased crime, as the destroyed state structures lose their ability to ensure order and the development of the state for a few years or even a few decades. Countries that have experienced fewer wars, revolutions, and other kind of externally forced turnarounds over several centuries have had much better conditions for accumulating capital and labor resources in terms of quantity and productivity.

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

Keywords: accumulation of factors, country development, productivity factors

Rybchynski’s theorem does indeed predict the accumulation of both capital and human resources (Exhibit 1-24). The accumulation of capital is directly linked to the accumulation of material capital, for example, the installation of new productive capacity, which adds to the total amount of productive capacity. The accumulation of labor resources is made possible by migration, e.g., the UK, Germany and the USA are heavily influenced by so-called economic migrants, who, in search of higher wages and better living conditions, want to leave their home countries and come to live in countries where their work is needed and better paid than in their home countries. The migration of Mexicans to the USA, the migration of Turks to Germany, and the migration of Pakistanis and Indians to the UK are all good examples of this. But direct immigration, the increase in labor resource, is also due to education, training, and vocational training systems, which enhances the productivity of workers.

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

Keywords: II World War, development of countries

Rybczynski’s theorem states that, given constant input prices, an increase in the supply of a single resource, such as an increase in capital, will lead to an increase in the production of capital-intensive products by a larger proportion, and, conversely, to a decrease in the ratio of labor-intensive products.
According to Rybczynski’s theorem, balanced growth is also possible when capital and labor 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 labor-intensive industries. Rybczynski published this theorem in 1955 after Leontief’s work on productivity paradox (Exhibit 1-25).

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