Verdoorn's Law

Verdoorn's Law is named after Dutch economist, Jake Verdoorn. In economics, this law pertains to the relationship between the growth of output and the growth of productivity. According to the law, faster growth in output increases productivity due to increasing returns.

*For a given country an expansion of the export sector may cause specialisation in the production of export products, which may: increase the productivity level, and increase the level of skills in the export sector. This may then lead to a reallocation of resources from the relatively less efficient non-trade sector to the more productive export sector. This productivity change may then lead to output growth.

Sometimes this is also called Verdoorn's effect.