Selected New Developments in International Trade Theory

J.V. Rahilly was an engineering librarian in Ontario.

This short review covers new theories of international trade, mainly based on the Cambridge Economic Policy Group’s model. It deals with economies of scale, product differentiation, and foreign protection. The inevitable conclusion is that trade liberalization benefits appear to be larger than was originally thought, particularly in such a large and self-defensive country as Canada (for example, protectionism wastes resources in transporting goods within Canada, especially from coast to coast, and tariffs become acrimonious to foreign countries that can deliver a clout to our markets).