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International Trade and Finance

Notes 4. Importable commodity : A commodity (such as cars in the U.S.) that a nation produces at
home and also imports (because of incomplete specialization in
production).
5. K-saving technical progress : Technical progress that increases the productivity of labor
proportionately more than the productivity of capital and results
in an increase in L/K at constant relative factor prices.
6. L-saving technical progress : Technical progress that increases the productivity of capital
proportionately more than the productivity of labor and results
in an increase in K/L at constant relative factor prices.
7. Neutral technical progress : Technical progress that increases the productivity of labor and
capital in the same proportion so that K/L remains the same at
constant relative factor prices.

5.9 Review Questions

1. What is the role of dynamic factors? Discuss.
2. What are the changes in factor supply and technology and trade? Give examples.
3. Write a short note on the dynamic factors, trade and development.
Answers: Self-Assessment
1. (i)(d) (ii)(a) (iii)(b) (iv)(b) (v)(b)
5.10 Further Readings

1. Kenneth L. Sokoloff, Stanley L. Engerman. "History Lessons: Institutions, Factor
Endowments, and Paths of Development in the New World". The Journal of
Economic Perspectives Vol 14 No.3 (2000): pp. 217-232
2. Kenneth L. Sokoloff, Stanley L. Engerman. "History Lessons: Institutions, Factor
Endowments, and Paths of Development in the New World". The Journal of
Economic Perspectives Vol 14 No.3 (2000): pp. 217-232
3. Kenneth L. Sokoloff, Stanley L. Engerman. "History Lessons: Institutions, Factor
Endowments, and Paths of Development in the New World". The Journal of
Economic Perspectives Vol 14 No.3 (2000): pp. 217-232
4. Kenneth L. Sokoloff, Stanley L. Engerman. "History Lessons: Institutions, Factor
Endowments, and Paths of Development in the New World". The Journal of
Economic Perspectives Vol 14 No.3 (2000): pp. 217-232

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