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 Putting Ricardo to Work

2012 ◽  
Vol 26 (2) ◽  
pp. 65-90 ◽  
Author(s):  
Jonathan Eaton ◽  
Samuel Kortum
Keyword(s):  
International Trade ◽  
Comparative Advantage ◽  
International Economy ◽  
Trade Theory ◽  
Center Stage ◽  
Ricardian Model ◽  
New Generation ◽  
David Ricardo

David Ricardo (1817) provided a mathematical example showing that countries could gain from trade by exploiting innate differences in their ability to make different goods. In the basic Ricardian example, two countries do better by specializing in different goods and exchanging them for each other, even when one country is better at making both. This example typically gets presented in the first or second chapter of a text on international trade, and sometimes appears even in a principles text. But having served its pedagogical purpose, the model is rarely heard from again. The Ricardian model became something like a family heirloom, brought down from the attic to show a new generation of students, and then put back. Nearly two centuries later, however, the Ricardian framework has experienced a revival. Much work in international trade during the last decade has returned to the assumption that countries gain from trade because they have access to different technologies. These technologies may be generally available to producers in a country, as in the Ricardian model of trade, our topic here, or exclusive to individual firms. This line of thought has brought Ricardo's theory of comparative advantage back to center stage. Our goal is to make this new old trade theory accessible and to put it to work on some current issues in the international economy.

scholarly journals Ricardo and Haberler: an essay on the evolution of the economic thought based on the four magic numbers in the international trade theory

2021 ◽  
Vol 38 (77) ◽  
pp. 171-185
Author(s):  
Flavia Poinsot
Keyword(s):  
International Trade ◽  
Comparative Advantage ◽  
Labor Cost ◽  
Economic Thought ◽  
Magic Numbers ◽  
Trade Theory ◽  
International Trade Theory ◽  
New Research ◽  
Over Time

The Ricardian comparative advantage is one key cornerstone in the international trade theory. There is no shortage of textbooks supposing that Ricardo used solely labour as a factor of production. This approach originates with Haberler in the 1930s, who wrote that Ricardo’s theory of comparative advantage is robust, but not the labor-cost doctrine, which, Haberler assumed, Ricardo applied. This paper summarizes why Haberler’s perspective emerged, essaying an explanation of his way of interpreting Ricardo. To do this, we considered the new research on Ricardo, whose facets to be known seem to renew over time and never end.

Can Ricardian Model Really Explain Trade?

2021 ◽  
Vol 3 (1) ◽  
pp. 21
Author(s):  
Kok Wooi Yap ◽  
Doris Padmini Selvaratnam
Keyword(s):  
International Trade ◽  
Palm Oil ◽  
Comparative Advantage ◽  
Real World ◽  
Trade Theory ◽  
The Real ◽  
Ricardian Model ◽  
Ricardian Trade Theory ◽  
Factors Of Production

This paper aims to analyse the international trade in the real world by applying the Ricardian trade theory. In doing this, simple comparative advantage assumptions are used to examine trading of palm oil and rice between Malaysia and Vietnam. By using this theory, it is proven that international trade takes place because of efficiency to produce exported product. A country will export products that use its abundant and cheap factors of production and import products that use its scarce factors. Various empirical evidences of previous studies are als o used to discuss the importance of the Ricardian model. However, it is also highlighted in the paper that the Ricardian model could be misleading as it has several limitations that restrict its usefulness.

scholarly journals Pakistan’s Exports and Global Economy: Export Competitiveness and Efficiency of Toys and Games

2021 ◽  
Vol 4 (4) ◽  
pp. 811-819
Author(s):  
Muhammad Shahid Maqbool ◽  
Furrukh Bashir ◽  
Hafeez Ur Rehman ◽  
Rashid Ahmad
Keyword(s):  
International Trade ◽  
Competitive Advantage ◽  
Comparative Advantage ◽  
Global Economy ◽  
Export Performance ◽  
World Market ◽  
Revealed Comparative Advantage ◽  
Export Sector ◽  
The World ◽  
Export Competitiveness

The aim of this study is to examine the export performance and competitiveness of Pakistan's toy exports by using different indices of revealed comparative advantage. The data were looked at from the International Trade Centre (ITC) for Pakistan’s toys exports during 2004-2020. The results of this study show that Pakistan enjoyed a comparative advantage in exporting toys to the world market during 2004-2020, because the RCA index is greater than 1. The positive values of RSCA and LnRCA indicate that Pakistan had a CA in the concerned sector during 2004-2020. The study also observed that Pakistan had a competitive advantage by employing Vollrath index (RCA#). In addition, the revealed competitiveness index (RC) indicates that Pakistan experienced competitiveness in the toy export sector. The RMA index shows that Pakistan also enjoyed a comparative advantage in the imports of toys during 2004-2020. This means that Pakistan also imports these products from other economies of the world. The index of RTA describes that Pakistan had a net comparative advantage in this sector during analysis. TBI illustrates that Pakistan is the net-exporter in the toys and games sector in the global economy. Pakistan's toy manufacturers need to find new innovative and technologically advanced methods to stimulate domestic toy production and exports.

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.

Review of Literature

2020 ◽  
pp. 13-35
Author(s):  
Murali Patibandla
Keyword(s):  
International Trade ◽  
Comparative Advantage ◽  
Developing Economies ◽  
Import Substitution ◽  
Trade Policies ◽  
Trade Theory ◽  
Reform Era ◽  
Strategic Trade ◽  
New Trade Theory ◽  
Trade And Investment

The chapter reviews fundamental theoretical contributions explaining determinants of international trade starting from comparative advantage, neo-technology theories, intra-industry trade, strategic trade policies and ‘New’ New Trade Theory. For developing economies, the Heckscher-Ohlin (H&O) Theory of Comparative Advantage in labour abundance is relevant. However, as countries start growing economically, neo-technology and intra-industry factors become relevant. The book traces the transition of international trade behaviour starting the Pre-reform era of import substitution to the Post-reform era of opening to international trade and investment. The conceptual discussion provides basic underlying theories in understanding international trade and investment behaviour of firms. It shows under what conditions international trade and investment are beneficial to a country. The discussion of the theories helps in formulating hypotheses for empirical testing in the following chapters.

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.

scholarly journals Trade Theory in International Economics

2019 ◽  
pp. 33-42
Author(s):  
Krzysztof Król
Keyword(s):  
International Trade ◽  
Comparative Advantage ◽  
International Economics ◽  
Trade Theory ◽  
New Trade Theory ◽  
Absolute Advantage ◽  
Compare And Contrast

You will get an overview about the nature of trade theory. Many terms related international trade here will be discussed. Overview of Mercantilism we will discuss here. Theory of absolute advantage will be deeply discussed here. Comparative Advantage related the advantage term here I will describe. In this article the ideas of Heckscher-Olin Theory, new Trade Theory and the theory of Porter’s Diamond will be discussed. By this article, we will be able to clearly understand international trade. WE will be able to compare and contrast different trade theories.

International trade: Research of the reasons for the fall

2019 ◽  
pp. 79-91 ◽  
Author(s):  
V. S. Nazarov ◽  
S. S. Lazaryan ◽  
I. V. Nikonov ◽  
A. I. Votinov
Keyword(s):  
Growth Rate ◽  
International Trade ◽  
Exchange Rate ◽  
Global Economy ◽  
Structural Changes ◽  
Global Value Chains ◽  
Value Chains ◽  
Negative Contribution ◽  
Basic Commodity ◽  
The Impact

The article assesses the impact of various factors on the growth rate of international trade. Many experts interpreted the cross-border flows of goods decline against the backdrop of a growing global economy as an alarming sign that indicates a slowdown in the processes of globalization. To determine the reasons for the dynamics of international trade, the decompositions of its growth rate were carried out and allowed to single out the effect of the dollar exchange rate, the commodities prices and global value chains on the change in the volume of trade. As a result, it was discovered that the most part of the dynamics of international trade is due to fluctuations in the exchange rate of the dollar and prices for basic commodity groups. The negative contribution of trade within global value chains in 2014 was also revealed. During the investigated period (2000—2014), such a picture was observed only in the crisis periods, which may indicate the beginning of structural changes in the world trade.

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