International Trade and Economic Growth: Studies in Pure Theory

International Trade and Economic Growth: Studies in Pure Theory

International Trade and Economic Growth: Studies in Pure Theory

International Trade and Economic Growth: Studies in Pure Theory

Excerpt

The studies collected in this volume embody the results of research conducted during the past four years into various theoretical problems in international economics. They fall naturally into three groups-- comparative cost theory, trade and growth, and balance of payments theory--although these groups are not mutually exclusive, the first and third interacting and extending in the second. In addition, they are linked by a common purpose--the consolidation of the work of previous theorists and its extension to new problems--and by a common method--the application of mathematically-based logical analysis to theoretical problems thrown up by discussion of current topics among economists, generally those relating to economic policy. The motivation, explicit and implicit, has usually been to see what could be made of the tools available, in analysing the problem that suggested itself as an interesting one.

Theoretical analysis of the type pursued here has two major functions, both of which are comprised in the scientific objective of simplicity of generalization. The first is to push the application of known and tested techniques into new areas, thus extending the range of the analytical apparatus built up by the labours of successive economic theorists. The second is to review the existing literature with the double object of verifying the accuracy of accepted conclusions and synthesizing the methods and results of previous writers into a simpler, more readily usable analysis. Both types of endeavour are represented in this volume.

The analysis of the relation between factor endowments, direction of trade, and the effect of trade on factor prices which begins the volume belongs to the second group. My interest in this topic originated in a vague feeling of dissatisfaction with Samuelson's 1948 article on factor price equalization; this was resolved by Pearce's article on the same subject, in the editing of which I had a share in 1951, and a number of other writers have since made the correct analysis available in a number of journals. But the puzzlement which greeted Harrod's attempt to explain to the Association of University Teachers of Economics why incomplete specialization does not necessarily imply factor price equalization convinced me that some useful work remained to be done in the way of simplification and tidying-up of loose ends, while Harrod himself provided one of the instruments required for the purpose. The argument of Chapter I is the result. It is intended as a systematization of one branch of the . . .

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