Technology, Human Resources and International Competition



It is never an easy task for economists to remind policy-makers of the relevance of the principle of comparative cost or comparative advantage. It is not always understood and, when it is, it is rarely adopted without reservations. This principle — a triumph of economic logic — rationalises the mutual beneficiality of free international trade regardless of country sizes or degrees of affluence. The principle is regarded as being of fundamental importance in connection with the major issues in international economic relations, e.g. trade preferences for poor countries, multilateral trade negotiations, adjustment assistance policies and, of course, the continuing national arguments over protectionism versus liberal trade policies. But to give the principle concrete form, to make it operational, it has to be incorporated in a theory which explains the source of comparative advantage. The fact is, however, that economists have developed a bewildering variety of theories to explain the determinants of international specialisation and trade in manufactured goods.


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Further Reading

  1. R. Findlay, Trade and Specialisation (Harmondsworth: Penguin Books, 1970) chaps 3–5. Highly recommended elementary treatment of the H-0 and technological gap theories of trade.Google Scholar
  2. H. G. Johnson, Comparative Cost and Commercial Policy Theory for a Developing World Economy, Wiksell Lectures, 1968 ( Stockholm: Almqvist & Wiksell, 1968 ).Google Scholar
  3. J. F. Morrall III, Human Capital Technology and the Role of the United States in International Trade (Tallahassee, Fla: University of Florida Press, 1972 ).Google Scholar
  4. B.Södersten, op. cit., chaps 4–7. A clear textbook exposition of the H-0 theory and the earlier empirical work on the Leontief Paradox.Google Scholar
  5. R. M. Stern, ‘Testing Trade Theories’, in P. B. Kenen (ed.), International Trade and Finance: Frontiers for Research ( Cambridge: Cambridge University Press, 1975 ) pp. 3–49.Google Scholar
  6. R. Vernon (ed.), The Technology Factor in International Trade, NBER (New York: Columbia University Press, 1970 ).Google Scholar

Copyright information

© Leonard Gomes 1978

Authors and Affiliations

  1. 1.Middlesex PolytechnicUK

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