How Far Can Foreign Trade and Customs Agreements Confer Upon Small Nations the Advantages of Large Nations?

Abstract

The question posed by the title of this paper would have been meaningless for the classical economists. In their view the size of a nation did not matter and had no bearing whatever on international trade, provided the latter were completely free. In a famous example involving Portugal and Great Britain, Ricardo showed that it was always to the advantage both of a large country and of a small one to specialize and exchange their products. It is true that the classical economists abstracted even from the very existence of nations and that in their view ‘the nation is never understood as an exchange partner nor as lending support to exchange partners. The nation never acts as a group possessing its own behaviour pattern or structural preference; it is void of sociological content. Foreign trade is carried on by isolated individuals who are, however, subject to special conditions through belonging to different nations.’²

Translated from the French by Elizabeth Henderson.