Introduction

Abstract

This book is to construct a theory of international trade. We are concerned with dynamic relations between international division of labor, division of consumption and determination of prices structure in the global economy. Our main contributions are related to revealing dynamic interdependence between capital accumulation, knowledge creation and utilization, economic growth, price structures and international trade patterns under free competition. We build our theory in a compact theoretical framework with a few concepts. The comparative advantage of our theory is that it uses only a few concepts and simplified functional forms and accepts a few assumptions about behavior of consumers, producers and institutional structures, but it achieves rich conclusions and it is conceptually easy to extend and generalize the theory because of its consistency and simplicity. Before developing our trade theory, we review some main theories of international economics.