soon, the possible opportunity costscould encourage India to shift to more productive, labor-intensive industries. If India also removes trade barriers – like high rental rates and high taxes – and bolsters internal businesses, they’ll see factor-price equalizationbegin to take place. With them currently being a labor-abundantcountry, FPEpredicts that the cost of capital should fall, and the cost of labor should rise. The relative price of labor-intensive goodsshould increase as India competes in this equalized market. As labor costs rise, Stolper-Samuelson theoremsays the increase in price should result in lower rental ratesand greater return to the factor used, through increasing wages.