The Lerner diagram (Lerner, 1952) is mainly used as a tool for relating goods prices and
factor prices in a two-good, two-factor, Heckscher–Ohlin (HO) trade model, but it can
also be used for other purposes (Deardorff, 2002). In a seminal paper, Findlay and Grubert
(1959) have utilized the Lerner diagram to study the effects of growth on factor proportions
and the pattern of trade. Their paper models growth as exogenous technological change, as
in the Solow model. Findlay and Grubert (1959) is still a standard reference for work on
trade and growth. What appears to have been neglected in the subsequent literature is that,
according to the Solow model, steady-state differences in factor intensities entirely reflect
differences in technology, i.e. differences between production functions and not differences
along a production function. In many contributions to the trade literature, factor intensities
are treated as being independent of technology differences. Such a modelling strategy implies
a Hicks-neutral concept of technology differences, whereas the Solow model implies a
Harrod-neutral concept of technology differences.