Summary of the Discussion
Some discussants took issue with Balassa’s statement that ‘since Ricardo’s time, transport costs have declined in importance while commercial policy has assumed an increasingly greater role’ and that therefore ‘locational theory would have had greater relevance for international specialisation in Ricardo’s time than today’ (p. 232 and p. 234). The importance of transportation costs was disputed and the need to consider other kinds of transfer costs was pointed out. In an attempt to reconcile different statements it was argued that transportation costs may be low and still important for location. The discussion also suggested alternative interpretations of Balassa’s findings on the effects of trade liberalisation. This session was chaired by Jagdish N. Bhagwati.
KeywordsTransport Cost Trade Liberalisation Exchange Rate Change Commercial Policy Transfer Cost
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