What use is the Neo-Classical Theory of International Trade?

doi: https://doi.org/10.35536/lje.1999.v4.i1.a7

Sikander Rahim



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Abstract

International economic policy is now more under the sway of orthodox economics than it has ever been. The main international economic institutions, the IMF, the World Bank, the WTO, and the major developed economies are unremitting advocates of free trade and impose their views on the developing countries. And the developing countries, whose attempts at economic development through protection have mostly failed, are on the whole inclined to accept these views. Over the last twenty years economic policy in these countries has more and more come to be formulated by orthodox neo-classical economists, often described in the press as “reformers”, who advocate more reliance on markets and less protection against imports.

Keywords

International trade, neo-classical theory, shortcomings, specialisation, models, Heckscher-Ohlin, Haberler, Bensusan-Butt, mechanised production