The Place of Institutional Changes in International Trade Theory in the Setting of the Undeveloped Economies
The topic assigned to this paper is ‘The Possibility of an Analysis Treating Institutional Changes as Endogenous Variables together with the usual Economic Variables’ in the study of the international allocation of economic activity.
KeywordsInstitutional Change Underdeveloped Country Factor Endowment Economic Unit Traditional Sector
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- 1.See R. I. McKinnon, Money and Capital in Economic Development (Washington, 1973) chap. 2.Google Scholar
- 2.For example, the growth of labour-intensive exports of tea and silk from Japan during her initial phase of economic development owed much to the government’s provision of technical and organisational services (cf. G. C. Allen and A. G. Donnithome, Western Enterprise in Far Eastern Economic Development, London, 1954, p. 242).Google Scholar
- An even more striking example of the ‘induced’ technological and organisational innovation along the lines suggested by the Heckscher-Ohlin theory of factor proportions is to be found in the Japanese government’s role in initiating and diffusing the labour-intensive and land-saving seed-and-fertiliser technology in agriculture in contrast to the labour saving innovations and mechanisation which characterised agricultural development in the United States (cf. Y. Hayami and V. W. Ruttan, Agricultural Development: An International Perspective, Part III, London, John Hopkins Press, 1971).Google Scholar
- 3.For a well documented account of the role of foreign entrepreneurs in inducing the shifts in the production feasibility frontiers of the underdeveloped countries, see G. C. Allen and A. G. Donnithome, Western Enterprise and Far Eastern Economic Development, Allen & Unwin (London, 1954) and also their Western Enterprise in Indonesia and Malaya (Allen & Unwin, London, 1957).Google Scholar
- W. O. Jones, Marketing Staple Food Crops in Tropical Africa (Stanford Research Institute, Menlo Park, 1969) chap. 9Google Scholar
- 4.Cf. H. Myint, ‘The “Classical” Theory of International Trade and the Underdeveloped Countries’, Economic Journal (June, 1958).Google Scholar