Since the inception of world trade, theoretical economists have tried to study all the processes of relations from the point of view of science. They, like physicists, discovered new theorems and explained situations leading to the decline or growth of the economy of a country. The peak of the development of international relations fell on the period of capitalization and a redeployment of forces in the world community, just in the post-war period. In this regard, many theories have appeared, including the Rybchinsky theorem. We will briefly and clearly try to explain the essence of this article.
Sources of origin
Young English student T.M. Rybchinsky in the 45-50 years of the last century studied the influence of industry on the country's economy. In those years, international relations developed successfully, and England was one of the leading countries in the export of goods. The main direction that Rybchinsky studied was Heckscher Olin's theory. According to its postulates, the country exports only those goods for the production of which it has enough of its own resources, and imports those that it is most in need of. It would seem that everything is logical. But in order for the theory to work, one must take into account the conditions for the emergence of international exchange:
- There are at least two countries, one of which has abundant production factors, and the other is experiencing a shortage of them.
- Pricing occurs at the level of comparison of factors of production.
- The mobility of production factors, that is, the existence of the ability to move them (for example, a piece of land, cannot be transported).
After analyzing the development of some countries over the past century, the young student deduced his theory. So the Rybchinsky theorem arose. The period of its occurrence fell precisely at the time of the rise of the capitalist countries and the decline of the Third World countries.
The formulation of the Rybchinsky theory
So, the time has come to formulate what is the essence of the theory of the English economist. He argued that if there are only two factors for the production of goods, and if you increase the use of one, then this will entail a decrease in the production of goods due to the second factor.
Explanation
At first glance, it seems that Rybchinsky's theorem is very confused. Briefly outline the main point. Imagine two enterprises. One produces computers that require a lot of capital, and he has plenty of money. Another grows grain, for which he also has enough resources, mainly due to labor. The first company exports computers and, due to the high price, is increasing its capital more and more, demand is growing and all forces are mobilized only for the production of equipment. At the same time, money for grain production is becoming less and less, labor is moving into a more profitable industry, and the company is degrading.
Plotting
Rybchinsky’s theorem states that the ratio of factors in the direction of their reduction or increase will always affect the final result of production, regardless of whether a particular industry or the economy of the country as a whole is considered. Consider the chart.
Again, we look at a concrete example of how factors of production increase or decrease depending on demand. According to the data, there are two goods X and Y. For the first, capital is needed, for the second - labor. The first vector OF shows the optimal ratio of labor and money needed to produce goods X with increasing demand. Similarly, for item Y, that displays the OE vector. The graph shows point G. These are the resources of the country. That is, there is a certain stock of capital (GJ) and labor (OJ). To meet the country's needs, goods X and Y are produced in volumes, respectively, F and E.
Rybchinsky's theorem is based on an increase in one of the factors. Let's say it will be capital. Now, for the manufacture of a new volume of goods Y (for export), more financial investments are needed, which is exactly G 1. The quantity of goods will be shifted to the point E 1 and increase by the segment EE 1. At the same time, capital for goods X will not be enough, which means that production will fall by the interval FF 1. Note that the distance GG 1 is much smaller than EE1. This means that even a small movement of one of the factors (in this case, capital) into the export-oriented sector leads to a disproportionate increase in the number of goods produced.
"Dutch disease"
In the long term, Rybchinsky's theorem can lead not only to the decline of a separate industry, but also to a decrease in the economic potential of an entire country. There are enough examples in world practice when the wrong priorities led to an increase in inflation, an increase in the exchange rate and a decrease in GDP. This effect was called the "Dutch disease."
The virus picked up its name from the Netherlands. It was there that in the mid-70s of the last century the first crisis situation occurred.
Around this period, the Dutch discovered large reserves of natural gas in the North Sea. They began to pay great attention to the extraction and export of the resource. It would seem that in this state of affairs the country's economy should have grown, but a completely opposite situation was observed. The Dutch currency was growing, and the increase was fast and very high, while the export of other significant goods was decreasing more and more.
The consequences of the "Dutch disease"
The reason for this was the outflow of resources from the manufacturing sectors of old goods into gas production. The more demand grew, the more investments were required. Extraction of a valuable resource required money, labor, technology. About export goods from other areas forgotten, focusing on one. As a result, the exchange rate has grown, which means that the country's competitiveness has decreased.
Rybchinsky's theorem once again proves the fact that problems of redistribution of resources can arise both in the domestic and foreign trade of the country. "Dutch disease" was ill many countries. A huge crisis happened with Colombia after rising demand for coffee. The virus and advanced European powers have not passed. Successfully recovered Great Britain, France, Norway.
Japanese economic miracle
Another example is Japan. This small island country in the 60s of the last century surprised the whole world with a rapid economic jump. Rybchinsky's theorem worked here too, but only with a positive effect.
All states can be divided into raw and industrial. Some export to the world market mainly products that will become raw materials for goods in another camp. Such states have a lot of labor, but incomes are small. Another type of trade is the exchange of finished products. As a rule, states trading in manufactured goods have capital and technology. Due to the fact that the first category has to buy more expensive products from the second, the latter live well.
Japan has used this principle. In its small territory it is impossible to grow anything. There are practically no resources either. All that is is a small hardworking and stubborn people. Thanks to discoveries in the computer sector, oil and gas processing and the chemical industry, Japan was able to adjust its economy so that, buying cheap raw materials, they processed it, and released expensive finished products to the world market.
