Unlike any other text on international trade, this groundbreaking book focuses on the dynamic long-run relationship between trade and economic growth rather than the static short-run relationship between trade and economic efficiency. The authors begin with well-known theory on international trade, and then take the student into more recent and less well-known work, all with a careful balance between empirical and theoretical perspectives. A valuable teaching tool for courses in international economics, economic growth, and economic development at both the undergraduate and graduate levels, the book uses some very modest algebra, calculus, and statistics. However, most analytical discussions are built around diagrams in order to make the text accessible to students with a variety of social science backgrounds. An Instructor's Manual is available to professors who adopt the text.
1. The Welfare Gains from Trade; Static Models and the Gains from Trade; Estimates of the Static Gains from Trade; Economic Growth and International Trade; The Power of Compounding; Does Trade Cause Growth? 2. Trade and Growth: The Empirical Evidence; The Statistical Relationship Between Trade and Growth; Regressing Economic Growth on International Trade; The Feder Model; Dealing with Simultaneity; Finding Trade's Growth Effect Using Qualitative Measures; Robust Studies; Testing How Trade Affects Growth; Summary and Assessment of the Empirical Results; 3. International Trade and Factor Accumulation; The Early Growth Models; The Classical Economists and Diminishing Returns; The Harrod-Domar Growth Model; Robert Solow and His Neoclassical Growth Model; The Gains from Trade According to the Solow Model; East Asia and the Solow Model; Conclusions; Appendix: The Convenient Cobb-Douglas Production Function; 4. Overcoming Diminishing Returns: Technology As an Externality; Factor Accumulation without Diminishing Returns; Technology; Technological Progress As an Externality; Learning By Doing; Learning By Trading; Conclusions; 5. Technological Progress As Creative Destruction; Joseph Schumpeter's Creative Destruction; The Schumpeterian R&D Model; A Mathematical Version of the Schumpeterian Model; The Long-Run Trend in the Costs of Innovation; Conclusions and Remaining Issues; 6. International Trade and Technological Progress; International Trade and the Schumpeterian Model; The Size of Economies and Technology; Leader-Follower Models of Growth; Sources of Ambiguity About Trade's Growth Effect; Protectionism and Creative Destruction; Conclusions and Remaining Issues; 7. Multi-Sector Models and International Trade; A Two-Sector Learning-by-Doing Model; Other Sectoral Models of Trade and Economic Growth; Terms of Trade Arguments for Protection; Protectionism to Promote Technological Progress; Import Substitution Policies; Conclusions; 8. International Trade and Technology Transfers; Domestic Technology versus Adopted Technology; Empirical Evidence on Technology Diffusion; Summary and Conclusions; 9. Restating the Case for Free Trade; Dynamic Arguments for Free Trade; A Much More General View of Trade and Growth; Concluding Comments.