In the analysis of growth and trade, growth in the labor force (coupled with no growth in the capital stock) in a relatively capital-abundant country would lead to what type of
"production effect" in the country?

Question

Quizplus · Accepted Answer

In a relatively capital-abundant country, growth in the labor force without growth in the capital stock would lead to a situation where labor becomes relatively scarcer compared to capital. This would lead to a higher marginal product of labor, resulting in higher wages and an increase in the cost of production. As a result, the country's comparative advantage in producing capital-intensive goods would diminish, leading to a significant decrease in exports and an increase in imports. This is known as the ultra-antitrade production effect.

In the Analysis of Growth and Trade, Growth in the Labor