Did Economists Cause Globalization?

Free Traders ◽  
2019 ◽  
pp. 113-138
Author(s):  
Malcolm Fairbrother
Keyword(s):  
Lived Experience ◽  
Free Trade ◽  
Comparative Advantage ◽  
Core Concept ◽  
Trade Theory ◽  
Mainstream Economic ◽  
Business Support

Academic economists are broadly supportive of initiatives for globalization, and their endorsements make a difference politically: they carry the authority of expertise. But this chapter shows, contrary to what many people believe, that agreements like NAFTA are not really based on mainstream economic ideas. Compared to formal neoclassical trade theory, the priorities and worldviews of businesspeople—which are in some respects quite different—are much more politically influential. Economists’ ideas are so marginal in part because they are not politically useful for constructing broad business support for free trade. For that reason, even officials and negotiators who subscribe to neoclassical ideas do not talk about trade in neoclassical ways. Few people understand economists’ neoclassical trade theory, including its core concept of comparative advantage, which does not resonate with the lived experience of businesspeople.

Ten Pages that Changed the World: Deconstructing Ricardo∗

2009 ◽  
Vol 2 (1) ◽  
pp. 1-33 ◽  
Author(s):  
Richard Peet
Keyword(s):  
Free Trade ◽  
Economic Geography ◽  
Comparative Advantage ◽  
Development Policy ◽  
Open Market ◽  
Trade Theory ◽  
The World ◽  
Neoliberal Development ◽  
Trading Scheme ◽  
Political Economic

Powerful ideas that shape the world become taken-for-granted verities, in two senses of the term: as the only world that is known; and as the only world that can be imagined. When hegemony controls the imagination, fundamental criticism becomes difficult, and perhaps, impossible. Yet what if there were flaws in the original idea, from which new worlds were constructed, that have materialized in a political-economic geography beset with seemingly unsolvable problems? For example, what if there have always been fundamental flaws in the free trade, open market, competitive, global system that dominates both the world as we know it and the conventional political-economic-geographical thought we know it through? This article speculates that a psycho-discursive act of deconstruction might unravel the entire, subsequent discourse. It aims deconstruction at a founding statement in the free trade, global ideal, by looking critically at David Ricardo's theory of comparative advantage. Ricardo's argument that specialization and free trade are universally beneficial, became a founding premise of conventional economic theory and a basic prescription of liberal and neoliberal development policy. The article looks critically: at the logical consistency and representational accuracy of Ricardo's theory, especially the claim that all participants benefit from participation in a free trading scheme, so that trade brings about a far better world. The article reaches two main, critical conclusions: free trade theory based in comparative advantage has, from the beginning, been an ideology for creating economic spaces open to domination by powerful, leading countries; economics and economic geography have, since their classical beginnings, been biased in that their founding statements reverse the reality they pretend accurately to represent.

scholarly journals RIVIEW SKEMA ACFTA TERHADAP EKSPOR INDONESIA KE TIONGKOK, HONGKONG DAN ASEAN

2018 ◽  
Vol 1 (1) ◽  
Author(s):  
Made Adnyana
Keyword(s):  
Regression Analysis ◽  
Free Trade ◽  
Comparative Advantage ◽  
Theory Model ◽  
Trade Theory ◽  
New Trade Theory ◽  
Highly Sensitive ◽  
Export Volume ◽  
Early Harvest ◽  
Normal Track

<p>          In addition to the free trade accord of Bali II, Indonesia has also agreed to implement ACFTA with RRChina and Hongkong. Four schemes agreed up on are Early Harvest Program (EHP), Normal Track (NT) Sensitive Track (ST) and Highly Sensitive Track (HST). The  method used in the study is applying  New Trade Theory model, i.e. involving Comparative Advantage determinants, along with regression analysis. The study  focuses on  data on export volume of  1996 up to  2013 on three-monhly basis. The finding of the study is that certain commodities have gained promising export in 2010; steady export growth has been experienced by two commodities numbered as 87 and 27 at the schemes.   The number 26 commodity at the scheme experienced the decline.</p><p><strong> </strong></p><p><strong>Keywords: </strong>ACFTA schemes, exsport from Indonesia, RR China, Hongkong</p>

scholarly journals The Evolution of Measurement Methods of Comparative Advantage and New Trends in IntraProduct International Specialization

2016 ◽  
Vol 12 (7) ◽  
pp. 82
Author(s):  
Lijun Jia ◽  
Maoguo Wu ◽  
Yixuan Liu
Keyword(s):  
Comparative Advantage ◽  
Measurement Methods ◽  
Calculation Methods ◽  
Core Concept ◽  
Trade Theory ◽  
International Trade Theory ◽  
Export Volume ◽  
Measure Methods ◽  
International Specialization ◽  
Original Measure

In the development and the evolution of international trade theory, comparative advantage has always been a core concept. A great deal of research pertains to the calculation methods of comparative advantage. However, most previous research on measurement methods of comparative advantage is mainly based on a country's import/export volume of a specific industry or product. Under the circumstances of contemporary intra-product international specialization, previous measurement methods are not appropriate. It is imperative to improve original measure methods of comparative advantage through stripping overseas contents of exports, and putting forward a new measurement index reflecting the domestic contents of export.

scholarly journals Is Free Trade Passé?

1987 ◽  
Vol 1 (2) ◽  
pp. 131-144 ◽  
Author(s):  
Paul R Krugman
Keyword(s):  
International Trade ◽  
Free Trade ◽  
Comparative Advantage ◽  
Imperfect Competition ◽  
Perfect Competition ◽  
Trade Theory ◽  
International Trade Theory ◽  
Export Subsidies ◽  
Good Policy ◽  
Import Restrictions

If there were an Economist's Creed, it would surely contain the affirmations “I understand the Principle of Comparative Advantage” and “I advocate Free Trade.” Yet the case for free trade is currently more in doubt than at any time since the 1817 publication of Ricardo's Principles of Political Economy, and this is due to changes that have recently taken place in the theory of international trade. While new developments in international trade theory may not yet be familiar to the profession at large, they have been substantial and radical. In the last ten years the traditional constant returns, perfect competition models of international trade have been supplemented and to some extent supplanted by a new breed of models that emphasizes increasing returns and imperfect competition. These new models call into doubt the extent to which actual trade can be explained by comparative advantage; they also open the possibility that government intervention in trade via import restrictions, export subsidies, and so on may under some circumstances be in the national interest after all. To preview this paper's conclusion: free trade is not passé, but it is an idea that has irretrievably lost its innocence. Its status has shifted from optimum to reasonable rule of thumb. There is still a case for free trade as a good policy, and as a useful target in the practical world of politics, but it can never again be asserted as the policy that economic theory tells us is always right.

scholarly journals Free Trade in Theory and Policy: Contemporary Challenges

2018 ◽  
Vol 7 (2) ◽  
pp. 13-35
Author(s):  
Daniel Nagel ◽  
Sorin Burnete
Keyword(s):  
International Trade ◽  
Free Trade ◽  
Comparative Advantage ◽  
Policy Instruments ◽  
Theoretical Models ◽  
Trade Theory ◽  
Common Parlance ◽  
Per Se ◽  
Foreign Competitors

Abstract Free trade denotes a state of international commercial relations premised on governments’ restraint from using policy instruments meant to favor indigenous industries against foreign competitors. According to the conventional trade theory advocated by classical and neo-classical thinkers, free trade makes little economic sense failing nations’ tendency to specialize based on comparative advantage, a concept with high persuasive influence despite the elapsing of time. Even though the comparative advantage rule has seldom been questioned per se, the free trade concept has been fiercely disputed and not infrequently, bashed. Nations’ involvement in international trade often follows patterns that do not fit theoretical models but attempt to respond to circumstantial interests, most often the need to protect poorly competitive industries. In common parlance, free trade has had both proponents and enemies.

Trade and Spatial Growth

2017 ◽  
Vol 18 (1) ◽  
pp. 94-111
Author(s):  
Sirimal Abeyratne ◽  
N. S. Cooray
Keyword(s):  
International Trade ◽  
Comparative Advantage ◽  
Global Economy ◽  
Spatial Concentration ◽  
Trade Theory ◽  
Missing Link ◽  
Spatial Growth

Comparative advantage is based on ‘locational factors’ so that trade leads to growth and its spatial concentration. Until recently, the nexus between trade and spatial growth received little space within trade analyses though it did not appear to be a missing link in initial contributions to trade theory. The reshaping of the global economy with greater integration has called for analyses of trade and spatial growth. This article examines theoretical premises of the link between international trade and spatial growth, and the implications of reshaping of the global economy for the study of spatial growth within trade theory.

scholarly journals Strategic areas of Ukraine’s national economy development under modern globalization transformation conditions

2019 ◽  
pp. 7-21
Author(s):  
Olha Vladymyr
Keyword(s):  
International Economic ◽  
Free Trade ◽  
National Economy ◽  
Pension System ◽  
International Experience ◽  
Invisible Hand ◽  
Trade Theory ◽  
National Production ◽  
National Economies ◽  
The Invisible

Introduction. The international economic community is promoting the principles of free trade theory, the principles of liberalization and the “invisible hand effect”, as well as the countries specialization and the erasure of national economic borders in the context of modern globalization processes. However, such recommendations are not always appropriate for countries with underdeveloped national economies and for countries that have not undergone a long period of development under conditions of national protectionism. Therefore, the article is devoted to the search of strategic directions for the national economy development under the conditions of modern globalization changes and economic and political instability. Purpose. Although Ukraine has adhered to the requirements and recommendations of international economic organizations over the past years, there has been no economic breakthrough in the country. Public life standards are not rising; according to various economic estimates and international rankings, Ukraine continues to hold weak positions. This situation requires special research and search for ways of entering the national economy of Ukraine to new positions. Methods. In the article methods of analysis and comparison of international experience and practice, methods of collection and systematization of statistical data’s are used. Results. The problems of low Ukrainian competitiveness among other countries have been revealed by taking into account the scientific literature analysis, international experience of national economies development in different countries and statistical data on the Ukrainian national economy. The priorities and principles of national production and industrial development, which ensure the competitive country’s position in the current globalization conditions, have been determined. The article shows Erik S. Reinert’s point of views, highlighted in the book “How Rich Countries Got Rich And Why Poor Countries Stay Poor” which relate to the critique of the recommendations regarding adherence to the free trade theory and specialization, as well as the liberalization principles and the “invisible hand effect”. The problems of the Ukrainian national economy development with postcolonial syndromes that are manifested in socio-psychological, managerial, cultural, as well as in economic behavior and peculiarities of national economy have been disclosed. Discussion. The necessity of structural changes in national production, as well as changes in scientific-educational, taxation and pension system, investment policy, overcoming oligarchy, and corruption, and excessive government intervention in a business have been substantiated. Three main components of the strategic national economy development have been proposed, concerning effective science education reform in order to strengthen the innovational capabilities and technological capacities of national production; reducing external debt and dependence on external creditors, orienting the financial sector towards serving and investing the in real economy; creating strong social, political and national, ethical and spiritual values in the society.

The Corn Laws and the Casuistry of Free Trade, 1813–1815

2021 ◽  
pp. 111-144
Author(s):  
Ryan Walter
Keyword(s):  
Political Economy ◽  
Free Trade ◽  
Comparative Advantage ◽  
Food Supply ◽  
Historical Context ◽  
Diminishing Returns ◽  
Corn Laws ◽  
The Stability ◽  
Conceptual Progress ◽  
Policy Question

This chapter examines the Corn Laws debate from 1813 to 1815, focusing on the contributions of Malthus, Ricardo, and Robert Torrens. This episode has traditionally been studied as a moment of conceptual progress for political economy, above all through the emergence of the concepts of diminishing returns and comparative advantage. The account here produces different results by returning the texts of Malthus, Ricardo, and Torrens to their historical context, which is shown to be one where casuistical argument was deployed to counsel Parliament on how to resolve a policy question. In particular, the issue was whether or not Parliament ought to diverge from the principle of free trade in the pursuit of other principles of statecraft, the stability and security of the food supply preeminently. Once the texts are read as instances of casuistry, Ricardo’s famed theoretical brilliance instead appears as clumsiness and detachment from the needs of Parliament.

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