Knowledge that Transforms

For the larger industrial countries-and especially the United States-there seems to exist a fairly strong correlation between the level of industrial production and the volume of non-agricultural employment. This correlation tends to show that the productivity of labour, in a given country, depends primarily upon the size of its economy. For smaller industrial countries, in which foreign trade often plays a much more important role, the correlation between production and employment no longer applies. In the present article, an attempt is made to show that this correlation may be generalized, on the assumption that the productivity of labour (and the size of the economy), in a given country, depends not only upon the number of persons engaged in production, but also on the intensity of its participation in the international trade. It is hoped that the results here presented may help to clear the ground for the measurement of the economic effects of trade policies, for the elaboration of longterm plans, and perhaps also for the study of such regional arrangements as Common Markets or Free Trade Areas.