The first edition of this book was published in 1989, pre-dating a number of important developments in the world trading system. In view of the major changes that have taken place in international trade since then, it has been necessary to re-write most of the original text. The basic structure of the original text has been retained with one or two alterations. Chapter 2 in the first edition, entitled The Changing Structure of World Output and Trade, has been moved to Chapter 1 and Chapter 1 in the first edition, entitled Basic Theories of International Trade and Production, has been moved to Chapter 2. At the same time, the content of Chapter 2 is now purely concerned with theories of trade, while the discussion of tariffs and international economic integration has been shifted to later chapters. The treatment of trade theories in Chapter 2 has also been made a little more formal and rigorous than in the first edition, so as to reduce the need for the reader to supplement the theoretical sections with reading from another, more conventional text.
Chapter 3 has been kept in much the same form as in the first edition. However, the section dealing with trade under imperfect competition has been expanded. Some formal models of intra-industry trade under imperfect competition, which were not dealt with in the first edition, are now included. Again, this should enable the reader to gain a much more complete picture of new trade theory than was previously possible, reducing the need to supplement the text with additional reading from another source. The title of Chapter 4 in the original text has been changed, but the content is much the same as in the first edition. Chapter 5, also, has much the same content as in the first edition.
Chapter 6 in the first edition, which was entitled The Growth of Japan and the Emergence of the Newly Industrialising Countries, has been split into two separate chapters. The need to include some new material, as well as up-date the rest, necessitated breaking the chapter into two. There are also sound pedagogical arguments for treating the two issues separately. Although the newly industrialising countries have to some degree followed in the wake of Japan, the factors causing their growth have been different. Moreover, the problems created by Japan’s current account surplus for the western industrialised countries differ from those resulting from the rise of the newly industrialising countries.
Chapter 8 differs in a major way from the original Chapter 7 in the first edition, which was entitled The Growth of the New Protectionism and the Adjustment Problem. The section on the adjustment problem has been moved into Chapter 7 as it makes better sense to discuss this problem in the context of the rise of the newly industrialising countries. At the same