Summary Record of the Debate

Abstract

Sir Roy Harrod introduced Mr. Bhagwati’s paper saying that while everyone regretted that Professor Samuelson could not be here to present the first paper because of the illness of his son, all were most grateful that Mr. Bhagwati had been able to produce this paper at short notice. Sir Roy wanted to make some general remarks, especially on the first section of Mr. Bhagwati’s paper, and he hoped that participants would not think these unduly revolutionary. The first section of the Bhagwati paper was built round Professor Ohlin’s reconstruction of the classical theory of comparative cost, which was based on relative factor endowments. Economists agreed that Professor Ohlin’s contribution represented an important and lasting reconstruction of the whole theory of comparative costs, but he thought that this particular formulation of it had caused international trade theory to take a wrong turn. Largely because of a pedagogic accident, teachers found it easiest to work in terms of two factors and two products, and the factors considered were usually capital and labour. Yet Sir Roy thought that relative endowments of capital and labour had a very small gravitation impact on the pattern of foreign trade.