International Trade Theory and Policy: A Review of the Literature

Levy Economics Institute Working Papers Series No. 635

24 Pages Posted: 26 Nov 2010

See all articles by Sunanda Sen

Sunanda Sen

Bard College - The Levy Economics Institute

Date Written: November 23, 2010

Abstract

This paper provides a survey of the literature on trade theory, from the classical example of comparative advantage to the New Trade theories currently used by many advanced countries to direct industrial policy and trade. An account is provided of the neo-classical brand of reciprocal demand and resource endowment theories, along with their usual empirical verifications and logical critiques. A useful supplement is provided in terms of Staffan Linder’s theory of “overlapping demand,” which provides an explanation of trade structure in terms of aggregate demand. Attention is drawn to new developments in trade theory, with strategic trade providing inputs to industrial policy. Issues relating to trade, growth, and development are dealt with separately, supplemented by an account of the neo-Marxist versions of trade and underdevelopment.

Keywords: Comparative Costs, Resource Endowment Pattern and Trade, Overlapping Demand, Strategic Trade, New Theories of Trade, Trade and Development

JEL Classification: F11, F12, F14

Suggested Citation

Sen, Sunanda, International Trade Theory and Policy: A Review of the Literature (November 23, 2010). Levy Economics Institute Working Papers Series No. 635, Available at SSRN: https://ssrn.com/abstract=1713843 or http://dx.doi.org/10.2139/ssrn.1713843

Sunanda Sen (Contact Author)

Bard College - The Levy Economics Institute ( email )

Blithewood
Annandale-on-Hudson, NY 12504-5000
United States

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