VARIATIONS OF PRODUCTION FACTORS THEORY

Abstract

The paper discusses the influence of the proportions of production factors on the establishment of public equilibrium. The theory of production factors occupies an important place in the history of economic thought. The creator of the theory of factors is considered to be the famous French economist Jean Baptiste Say (1767-1832). J. B. Say campaigned against mercantilism and protectionism and advocated a policy of free trade. Factor theory finds significant application in the international division of labor. Another French economist, Frédéric Bastiat, developed the theory of economic harmony. In this theory F. Bastiat sought to reach an economic agreement between different groups of the society, through their cooperation. Canadian engineer-technologist P. Monsarov developed a theory of four factors. Nowadays, Heckcher-Ohlin Theory is widely used in the international division of labor.