Neo-sustainable Growth Theory: Study of Extended HO Model to Productive Factors’ Virtual Movements

Abstract

This paper aims to fill the critical gap in the existing literature, which often treats trade and sustainability as separate fields. By combining these two dimensions, it would open avenues for new policy recommendations and strategies for promoting sustainable development in an increasingly interconnected global -economy. In terms of theoretical foundations, I link economics, technology and environmental sciences, to enrich the academic discourse and provide a comprehensive framework for future studies.  This provides a unique perspective between economic growth and volatility through the lens of intergenerational and international productive factors’ virtual movements. By extending the Heckscher-Ohlin theory to incorporate virtual trade and intergenerational dynamics, the findings offer a fresh theoretical framework and empirical evidence that enrich our understanding of globalization’s mechanisms. The study’s findings on the Production Possibilities Frontier (PPF) and its implications for achieving general equilibrium contribute to ongoing debates about sustainable development and economic interdependencies. The article’s innovative approach and its comprehensive analysis offer a unique foundation to addressing real-world economic challenges. More specifically, using panel data to test the positive and negative relationships between growth and volatility and the impact of productive factors’ virtual movements, I find, the Heckscher-Ohlin theory extended to the virtual movements of factors between countries and between generations is not only empirically verified but constitutes the real foundation of sustainability. Thus, a systematic practicing of the whole set of the extended Heckscher-Ohlin theory’s full set of hypotheses as a nation’s social laws and policies or strategies, is necessarily leading to sustainable development locally and globally.