Extensions of the Theory
The reality of the generalized theory in its development in Chapters 4 and 5 has been constrained by the several assumptions made.1 These assumptions are also characteristic of work done with the orthodox theory. The purpose of this chapter is to release some of those assumptions so that the implications of some specified disturbance for the output-mix, income and trade structure of a nation can be analyzed under more realistic conditions. In the interests of maintaining as much simplicity as possible, the assumptions are released sequentially and not cumulatively.
KeywordsInternational Trade Transportation Cost Direct Investment Comparative Advantage Aggregate Demand
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- 5.Gottfried Von Haberler, The Theory of International Trade ( New York: The Macmillan Company, 1950 ), pp. 296–302.Google Scholar
- 13.See Robert E. Baldwin, ‘Determinants of the Commodity Structure of U.S. Trade’, American Economic Review 61 (March 1971), pp. 126–46. But see Caves’ faith in the orthodox model in Trade and Economic Structure p. 282.Google Scholar