The pure theory of international trade

The generalized theory of distortions and welfare

This paper begins by systematically developing the "static" theory of preferential trade areas (PTAs) and showing that neither a large volume of initial intra-union trade nor geographical proximity can serve as a guide to welfare enhancing PTAs. The paper then discusses the modern literature addressing welfare effects of simultaneous division of the world into many PTAs, the impact of the decision to form a PTA on external tariffs and the "dynamic" time-path question of whether PTAs are building blocks or stumbling blocks towards multilateral freeing of trade. A final section discusses key theoretical considerations in the empirical evaluation of PTAs.

background or methods

Preferential Trade Liberalization: The Traditional Theory and New Developments

This paper presents a review of nine theoretical models of foreign direct investment (FDI). Discussed are early studies of determinants of FDI (1) as well as determinants of FDI based on the neoclassical trade theory (2), ownership advantages (3), aggregate variables (4), the ownership, location and internalization advantage framework (5), horizontal and vertical FDI models (6), the knowledge-capital model (7), diversified FDI and risk diversification models (8) and policy variables (9). From each of the nine theories, the relevant determinants of FDI are derived. Empirical studies indicate the importance of these determinants in the real world. The paper shows that there is not one single theory of FDI, but a variety of theoretical models attempting to explain FDI and the location decision of multinational firms. Therefore, any analysis of determinants of FDI should not be based on a single theoretical model. Instead, FDI should be explained more broadly by a combination of factors from a variety of theoretical models such as ownership advantages or agglomeration economics, market size and characteristics, cost factors, transport costs, protection, risk factors and policy variables.

methods

Determinants of foreign direct investment – a tale of nine theoretical models

A Survey of the Theory of International Trade: Part 2, The Neo-Classical Theory

The movement of labor out of agriculture is a universal concomitant of economic modernization and growth. Traditional migration models overlook many potential interactions between migration and development. Given imperfect markets characterizing most migrant-sending areas, migration and remittances can have far-reaching impacts, both positive and negative, on incomes and production in agricultural households. Linkages through product and factor markets transmit impacts of migration from migrant-sending households to others inside and outside the rural economy. Recent theoretical and empirical studies reveal the complexity of migration determinants and impacts in rural economies, and they point to new arenas for policy intervention.

The pure theory of international trade

Citations

The generalized theory of distortions and welfare

Preferential Trade Liberalization: The Traditional Theory and New Developments

Determinants of foreign direct investment – a tale of nine theoretical models

A Survey of the Theory of International Trade: Part 2, The Neo-Classical Theory

Human capital: Migration and rural population change

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