OH. 21

INTERNATIONAL DISEQUILIBRIUM

333

investment in country A. This may come about bythe factors in B producing goods previously importedfrom A, thus releasing factors in A to produce forinvestment in A, or by factors in B producing goodsfor export to A which were previously produced in A,thus releasing factors in A to produce for investmentin A, or by factors in B producing goods for export toA, which can be directly utilised for the purpose ofthe additional new investment which is now takingplace in A.

If this change-over in the character of productioncan be effected without any loss of efficiency, e.g. ifcountry B can produce goods, previously produced in

A, to sell in B or in A, as the case may be, at the sameprice as before, without any reduction in the money-earnings of the factors of production as compared withwhat they were getting in their previous employmentor any loss to the entrepreneurs, then there is noreason why rates of money-earnings in the twocountries should be any different in the new positionof equilibrium from what they were in the old. In sofar as country B is specially efficient in the directproduction of materials for the new investment-goodsrequired for use in A, there may well be not only noloss of efficiency as compared with producing thesegoods in A, but actually a gain of efficiency ; and inthis case, so far from money-earnings in B falling rela-tively to those in A, they might, in conceivable cir-cumstances, actually rise as a result of the increasedattractiveness of kinds of investment in A, which canonly be efficiently supplied by factors of production in

B. If, on the other hand, the new investment-goodsin A have to be produced by factors of production inA, which factors are made available by being releasedfrom producing goods hitherto exported to B orhenceforward imported from B, then the presumptionis the other way round; for it is unlikely that Awould have previously exported the goods in question