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• Publié par: beboj
• Nombre de lectures: 26
• Langue: English
• Poids de l'ouvrage: 1 Mo

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Research Paper No. 992
\‘
THEORETICAL ISSUES CONCERNING THE HISTORY OF
INTERNATIONAL TRADE AND ECONOMIC DEVELOPMENT
Gerald M. Meier
Delivered at the Free University, Berlin, May 6, 1988.
IAnalyses of the contribution of international trade to economic development
display a curious tension between pessimistic and optimistic conclusions. If a
nation follows its comparative advantage and realizes the gains from trade will it
also be on its optimal development path? Or, in contrast, should the nation
abandon comparative advantage and relinquish the gains from trade the better to
secure the gains from growth? Theoretical perspectives on this issue can come from
classical trade theory, neo classical trade theory, and recent theories of international
trade. Historical perspectives can be derived from even before the industrial
revolution; subsequent papers will illuminate the historical experience of a number
of countries. This paper focuses on the theoretical issues, with concentration on the
pessimistic optimistic strand in the history of thought.
A colleague’s Festschrift is a stimulating occasion for one’s own retrospection,
and perhaps a bit of autobiography can sharpen the central issue that I want to
discuss. When I first studied international trade in the early 1950s at Harvard with
Professor Gottfried Haberler, the theory of international trade theory took resources,
technology, and tastes as given. The following year at the University of Oxford, Hia
Myint introduced me to problems of economic development, and I studied the
macrodynamic models of Roy Harrod and John Hicks. I then read the pioneering
works of Ragnar Nurkse and Arthur Lewis. Both Nurkse and Lewis were
pessimistic about the power of international trade to act as an “engine of growth” (in
D. H. Robertson’s phrase)l for the late developing nations of Asia, Africa and Latin
America. And Harrod and Hicks were stressing the importance of dating variables
that are changing. The problem for me thus became how to relate the great
tradition of Ricardo, Marshall, and Edgeworth on comparative advantage and the
1
D. H. Robertson, “The Future of International Trade,” reprinted in American Economic Association,
Readings in the Theory of International Trade, (1949), p. 501.
2static gains from trade with the development issues raised by Nurkse and Lewis and
with the dynamic theory introduced by Harrod and Hicks.
I want to pursue that problem again here. I shall, however, offer a necessarily
highly condensed statement of the relationship between international trade and
economic development from different theoretical perspectives, and I shall
concentrate on only these limited issues in trade pessimism theory: the stimulus
from exports in an open dualistic economy, and import substituting
industrialization versus export promotion strategies.
1. Classical Trade Theory and Growth
Extremely simple but justly celebrated, Ricardo’s model of England and
Portugal and cloth and wine establishes a basis for international specialization
according to comparative differences in real cost. In his 2 country2 commodity 1
factor (labor) model, Ricardo demonstrated that under conditions of free trade, a
country will specialize in the production and export of those commodities for which
its costs are comparatively lowest, and will import commodities it can produce only
at high relative cost. The cost of “indirectly producing” imports through
specialization on exports is less than if the country directly produced the importables
at home. In following its comparative advantage, each country maximizes output
(imports) per unit of input (exports). The welfare result, according to Ricardo, is that
“the extension of foreign trade. . . will very powerfully contribute to increase the
2mass of commodities, and therefore, the sum of enjoyments.” And these gains
from trade will accrue to each trading nation: trade is symmetrically beneficial. We
would now phrase Ricardo’s conclusion on the merits of free trade in terms of an
2
David Ricardo, Principles of Political Economy, (1817).
3increase in real national income attained by an optimal allocation of resources on a
worldwide basis theattainment of Pareto international efficiency, with trade as a
positive sum game.
Perhaps of even more significance for developing countries are two earlier
versions of trade theory in classical thought a“vent for surplus” theory and a
3dynamic “productivity” theory. These two theories are clearly expressed in Adam
Smith’s Wealth of Nations:
Between whatever places foreign trade is carried on, they all of them derive
two distinct benefits from it. It carries out that surplus part of the produce of their
land and labour for which there is no demand among them, and brings back in
return for it something else for which there is a demand. It gives a value to their
superfluities, by exchanging them for something else, which may satisfy a part of
their wants, and increase their enjoyments. By means of it, the narrowness of the
home market does not hinder the division of labour in any particular branch of art
or manufacture from being carried to the highest perfection. By opening a more
extensive market for whatever part of the produce of their labour may exceed the
home consumption, it encourages them to improve its productive powers, and to
augment its annual produce to the utmost, and thereby to increase the real revenue
and wealth of society (Vol. I, Cannan ed., p. 413).
Smith’s “vent for surplus” theory of international trade contrasts with
Ricardo’s comparative cost theory in two ways: 1) the comparative cost theory
assumes that a nation’s resources are given and fully employed before the nation
enters into international trade. After being opened to trade, the country faces a new
set of relative prices on world markets, and reallocates its given resources more
3
For more detailed exposition, see HIa Myint, “The ‘Classical Theory’ of International trade and the
Underdeveloped Countries,” Economic Journal, June 1958, PP. 317 337. The term “ventfor surplus” was
first used by John H. Williams.
4efficiently between expansion of export production and contraction of domestic
production. In contrast, according to the vent for surplus theory, the country enters
into international trade with surplus productive capacity over domestic
consumption requirem~ents. The function of international trade then is not to
reallocate given resources but rather to provide the new effective demand for the
output of surplus resources that would have remained unutilized without trade.
Export production can thus be increased without reducing domestic production;
exports become a virtually costless means of acquiring imports and expanding
domestic activity. This was how Smith used the theory to support free trade.
J. S. Mill thought this theory crude and “a surviving relic of the mercantile
4theory.” Modern economists may also consider it crude for its deficiencies in
technical analysis. The theory, however, has helped to illuminate some historical
episodes of 19th century development. Myint, for instance, has applied the theory to
the opening up of the primary exporting countries in Southeast Asia, Latin
America, and Africa during the 19th century. When brought into world markets in
the 19th century, these underdeveloped countries began with a sparse population in
relation to natural resources. At this time the economies were essentially
subsistence economies and a well developed price mechanism and high degree of
factor mobility did not exist to equilibrate away the disproportion between land and
labor. As Myint observes, given the genuine historical setting of an isolated
economy, the initial disproportion between its resources, techniques, tastes, and
population showed itself in the form of surplus productive capacity.
Once the opening up process got into its stride, the export production of these
countries expanded very rapidly along a typical growth curve, rising very sharply to
begin with and tapering off afterwards. Peasant export production of a traditional
4
Principles of Political Economy (1848), p. 579.
5crop (for example rice in Southeast Asia) expanded by using underemployed labor
and by bringing more land under cultivation with the same traditional methods of
cultivation. Even where new peasant export crops were introduced (for example
palm oil and ground nut exports in West Africa), they could be produced by fairly
simple methods that involved no radical change from the traditional techniques of
agricultural production. While peasant export crops expanded by extension of
cultivation using the traditional methods of production, the mining and plantation
sectors of the economy expanded through the inflow of large movements of cheap
labor from India and China and by western enterprise improving transport and
communications and discovering new mineral resources (the “unlocking of the
tropics” in Professor L. C. A. Knowles’ phrase). Rather than making a given
volume of resources more productive, these external influences increased the total
volume of that could be drawn into export production.
Myint concludes that “instead of a process of economic growth based on
continuous improvements in skills, more productive recombinations of factors and
increasing returns, the 19th century expansion of inte