I wish to make two comments on Hollis Chenery’s most interesting paper. The first comment is meant to be constructive in regard to the debate at this symposium on the utility of the ‘small’ models of trade theory, in particular of the 2 × 2 × 2 model (which several of those here who have failed to keep up with the many recent theoretical developments still erroneously consider to be all that there is to trade theory). It should be useful therefore to show how small models can yield big insights (just as big models often yield small insights) by demonstrating how some of Hollis Chenery’s regressions can be ‘explained’ by the classroom results of trade theory in its simplest, 2×2×2 version.


Capita Income Technical Change Production Structure Commodity Price Trade Theory 
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  2. Chenery, H. and Taylor, L., ‘Development Patterns: Among Countries and Over Time’, Review of Economics and Statistics, Vol. 50 (1968).Google Scholar
  3. Findlay, R. and Grubert, H., ‘Factor Intensities, Technological Progress and the Terms of Trade’, Oxford Economic Papers (1959), pp. 111–21.Google Scholar

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© The Nobel Foundation 1977

Authors and Affiliations

  • Jagdish N. Bhagwati

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