The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Ricardian Trade Theory

  • Kiminori Matsuyama
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2246

Abstract

Ricardian trade theory takes cross-country technology differences as the basis of trade. By abstracting from the roles of factor endowment and factor intensity differences, which are the primary concerns of factor proportions theory, Ricardian trade theory offers a simple and yet powerful framework within which to examine the effects of country sizes, of technology changes and transfers, and of income distributions. Moreover, its simple production structure makes it relatively easy to allow for many goods and many countries, and hence capable of generating valuable insights which are lost in the standard two-country, two-sector model of international trade.

Keywords

Absolute advantage Cobb–Douglas functions Comparative advantage Constant returns to scale Diminishing returns to scale Export-based and import-biased technology Export subsidies Factor endowment Factor intensity Factor proportions Gains from trade Globalization Iceberg costs Immiserizing growth Increasing returns to scale International trade North–South trade Product cycles Productivity growth Ricardian trade theory Size of nations Specific factor models Structural change Technical change Terms of trade Trade costs Trade, technology diffusion and growth Transfer of technology Transfer problem 

JEL Classifications

This is a preview of subscription content, log in to check access.

Bibliography

  1. Acemoglu, D., and J. Ventura. 2002. The world income distribution. Quarterly Journal of Economics 117: 659–694.CrossRefGoogle Scholar
  2. Acemoglu, D., P. Antras, and E. Helpman. 2007. Contracts and technology adoption. American Economic Review 97: 916–943.CrossRefGoogle Scholar
  3. Alvarez, F., and R.E. Lucas, Jr. 2004. General equilibrium analysis of the Eaton–Kortum model of international trade. Working Paper, University of Chicago.Google Scholar
  4. Becker, G. 1952. A note on multi-country trade. American Economic Review 42: 558–568.Google Scholar
  5. Copeland, B., and S. Taylor. 1994. North–South trade and the environment. Quarterly Journal of Economics 109: 755–787.CrossRefGoogle Scholar
  6. Costinot, A. 2006. On the origins of comparative advantage. Working paper, UCSD.Google Scholar
  7. Dornbusch, R., S. Fischer, and P.A. Samuelson. 1977. Comparative advantage, trade and payments in a Ricardian model with a continuum of goods. American Economic Review 67: 823–839.Google Scholar
  8. Eaton, J., and S. Kortum. 2002. Technology, geography, and trade. Econometrica 70: 1741–1779.CrossRefGoogle Scholar
  9. Flam, H., and E. Helpman. 1987. Vertical product differentiation and North–South trade. American Economic Review 77: 810–822.Google Scholar
  10. Grossman, G., and E. Helpman. 1995. Technology and trade. In Handbook of international economics, ed. G. Grossman and K. Rogoff, Vol. 3. Amsterdam: North-Holland.Google Scholar
  11. Hicks, J.R. 1953. An inaugural lecture. Oxford Economic Papers 5: 117–135.CrossRefGoogle Scholar
  12. Hummels, D., J. Ishii, and K.-M. Yi. 2001. The nature and growth of vertical integration in world trade. Journal of International Economics 54: 75–96.CrossRefGoogle Scholar
  13. Itoh, M., and K. Kiyono. 1987. Welfare enhancing export subsidies. Journal of Political Economy 95: 115–137.CrossRefGoogle Scholar
  14. Jones, R.W. 1979. Technical progress and real incomes in a Ricardian trade model. In International trade: Essays in theory, ed. R.W. Jones. Amsterdam: North-Holland.Google Scholar
  15. Krugman, P. 1986. A ‘technology-gap’ model of international trade. In Structural adjustment in developed open economies, ed. K. Jungenfelt and D. Hague. London: Macmillan.Google Scholar
  16. Matsuyama, K. 1996. Why are there rich and poor countries?: Symmetry-breaking in the world economy. Journal of the Japanese and International Economies 10: 419–439.CrossRefGoogle Scholar
  17. Matsuyama, K. 2000. A Ricardian model with a continuum of goods under nonhomothetic preferences: Demand complementarities, income distribution and north-south trade. Journal of Political Economy 108: 1093–1120.CrossRefGoogle Scholar
  18. Matsuyama, K. 2005. Credit market imperfections and patterns of international trade and capital flows. Journal of the European Economic Association 3: 714–723.CrossRefGoogle Scholar
  19. Matsuyama, K. 2007a. Beyond icebergs: Towards a theory of biased globalization. Review of Economic Studies 74: 237–253.CrossRefGoogle Scholar
  20. Matsuyama, K. 2007b. Productivity-based theory of manufacturing employment declines: A global perspective. Working paper, Department of Economics, Northwestern University.Google Scholar
  21. Matsuyama, K. 2007c. Uniform versus non-uniform globalization. Working paper, Department of Economics, Northwestern University.Google Scholar
  22. Sanyal, K.K. 1983. Vertical specialization in a Ricardian model with a continuum of stages of production. Economica 50: 71–78.CrossRefGoogle Scholar
  23. Stokey, N. 1991. The volume and composition of trade between rich and poor countries. Review of Economic Studies 58: 63–80.CrossRefGoogle Scholar
  24. Wilson, C.A. 1980. On the general structure of Ricardian models with a continuum of goods. Econometrica 48: 1675–1702.CrossRefGoogle Scholar
  25. Yanagawa, N. 1996. Economic development in a Ricardian world with many countries. Journal of Development Economics 49: 271–288.CrossRefGoogle Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Kiminori Matsuyama
    • 1
  1. 1.