Factor world

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Factor World is a term used by William Easterly to describe the traditional model of aggregate production function which is: Y = K^α . (AL)^(1-α)

It is a model of Factors of production movement based on free movement of those factors which in theory would reduce inequality between nations.

It is used as the opposite of Productivity world which claims relative productivity amongst factors is the same in the sectors across countries, but rich countries have absolute productivity advantage.