By Douglas Hagued, Roy Harrod, Douglas Hague

ISBN-10: 0333406265

ISBN-13: 9780333406267

ISBN-10: 1349084581

ISBN-13: 9781349084586

ISBN-10: 1349084603

ISBN-13: 9781349084609

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Extra resources for International Trade Theory in a Developing World: Proceedings of a Conference held by the International Economic Association

Sample text

And this, indeed, is a tenable view. • Within this framework, the proposition that free trade is superior to no trade certainly remains unimpeached. It must be admitted, however, that these models, in discussing capital accumulation, abstract from those very difficulties that arise with the phenomenon of time and multi-period optimality. (i) Since the increment in capital stock is autonomous, the question of the optimality of the sa'Ving decisions that generated the total savings and investment is evaded.

6 Moreover, the analysis could be extended to other questions such as, for instance, the effect on factor proportions in each activity (which depends on the shift in the factor price-ratio) and on the volume of trade (where a distinction must be drawn between the volume of exports and of imports}. It should be noted also that the phrase 'restricted trade', in this section, refers to trade restricted by a non-prohibitive tariff (or export tax; A. P. , Vol. III (August 1936}, pp. 306-13). 7 This statement rules out the possibility of multiple equilibria in consumption at the same price-ratio.

Ii) Factor price-ratio. The price of the factor used intensively in the exportable good must be correspondingly lower, and of the other factor higher, under restricted trade, except that there may be no change if inequalities occur with specialization. (iii) Absolute real income of factors. The distinction between real wage and real income is relevant here. (a) The real wage of the factor used intensively in exportables will rise ; and hence also its real income. (b) However, the real wage of the other factor will fall when restricted trade does not eliminate incomplete specialization and may actually rise when inequalities occur with specialization.

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International Trade Theory in a Developing World: Proceedings of a Conference held by the International Economic Association by Douglas Hagued, Roy Harrod, Douglas Hague

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