Publisher Summary The theory of cost-benefit analysis is widely used. It contributes to the understanding by giving a formal description of the subject and examining the theoretical basis for some of the techniques that have become the accepted tools of decision-making around the world. The aim of cost-benefit analysis is to provide a consistent procedure for evaluating decisions in terms of their consequences. This might appear as an obvious and sensible way to proceed, but it is by no means the only one. Cost-benefit analysis clearly embraces an enormous field. It offers clear guidelines for the evaluation of government decisions in such varied fields as tax, trade, or incomes policies; the provision of public goods; the distribution of rationed commodities; or the licensing of private investment. The chapter discusses the way cost-benefit analysis should proceed, a fairly unified account of the most salient results of the theoretical literature, and the way the framework encompasses a number of approaches to the definition and formulation of cost-benefit problems and describes the implications for a number of practical issues.

Chapter 14 The theory of cost-benefit analysis

Publisher Summary The extensive structure of modern trade theory has been built on a foundation of several extreme assumptions, including that of low and even dimensionality. This chapter is concerned with Heckscher–Ohlin theory of international trade in higher dimensions. This theory, in its standard two-commodity, two-factor version has dominated international trade theory for over 30 years. But this dominance has long been made uneasy by a widespread suspicion that world commerce does not accord well with the theoretical structure. There are two particular areas of concern. The first stems from the fact that the largest part of world trade involves the exchange of roughly similar products among similar economies, whereas the factor endowment theory, and comparative cost theory, generally teaches to look to international dissimilarities for the causes of trade. A large part of this actual trade is classified as intraindustry even with significant disaggregation. Thus probing its causes requires a high degree of disaggregation—that is, the explicit consideration of a large number of goods. The second area of concern stems from the Leontief Paradox. The sensitivity to higher dimensions of the basic propositions of the modern theory of international trade is the key issue for the practical relevance of the logical structure that has dominated trade theory in the past 30 years.

Chapter 3 Higher dimensional issues in trade theory

Publisher Summary Growth and development are used interchangeably Growth has the connotation of simply more of everything, while development is taken to refer to some qualitative transformation or structural shift In practice, the development aspect of trade theory arises from the attempt to address problems regarded as of major significance for the less developed countries of the world economy These have ranged from the infant industry problem of Hamilton and list to the terms of trade problem The insights and concerns of these critics of orthodox doctrine have led to a number of attempts, sympathetic and otherwise, to handle these issues analytically This chapter provides an overview on Ricardian theory and considers some neglected aspects of Ricardo's ideas on trade and growth, based on his analysis of the distributive shares It discusses Arthur Lewis three-good Ricardian model of the terms of trade and Emmanuel's concept of unequal exchange It also reviews neoclassical theory, which contains the major mainstream literature on growth and trade, with discussions on comparative statics, dynamics, and the concept of immiserizing growth and foreign investment It also discusses various theoretical aspects of trade and development issues, including analyses of infant industry protection, two-gap models, the open dual economy, and an extensive discussion of recent work on North–South models

Chapter 4 Growth and development in trade models

The following sections are included:AssumptionsThe Factor Content of TradeA Theorem on the Factor Content of TradeImplication for the Pattern of Factor-Content TradeImplications for the Pattern of Commodity TradeFactor Intensity AmbiguitiesREFERENCES

https://www.jstor.org/stable/pdfplus/1810010.pdf

The General Validity of the Heckscher-Ohlin Theorem

Publisher Summary Normative economics is concerned with making welfare judgments about policies and economic events This chapter discusses government policies In the case of trade theory, commercial policy-normative economics embraces the study of the welfare consequences of various events when policies are constant The chapter covers the main areas of normative trade theory, but not fully The chapter discusses central parts of policy-orientated normative trade theory on the terms of trade argument for protection It also provides an overview on theory of domestic distortions A major result has been downgrading the role of trade policy and thus rehabilitating the case for free trade, at least aside from the orthodox optimal tariff argument Most arguments for protection, other than the terms of trade argument, turned out to originate in some market failure in the domestic economy—some domestic divergence between prices and marginal costs The first-best policy is then to deal with this divergence directly

The Normative Theory of International Trade

The shadow exchange rate in an economy with trade restrictions

An extension of the n‐factor case of factor proportions theory

I. The gains from trade, 556. II. Changes in the terms of trade, 558. — III. Open economies following the Golden Rule, 559. — IV. Summary, 562.— Appendix, 563.

Trent J. Bertrand

Papers

The shadow exchange rate in an economy with trade restrictions

An extension of the n‐factor case of factor proportions theory

The Gains from Trade: An Analysis of Steady-State Solutions in an Open Economy