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New Trade Theory versus Old Trade Policy: A Continuing Enigma

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  • Deraniyagala, Sonali
  • Fine, Ben

Abstract

This paper examines the theoretical and empirical grounds for trade liberalisation. We note that many of the conventional arguments relating to the static and dynamic gains from liberalisation are based on fragile theoretical grounds. We also show that, although new trade theory takes account of some of the complexities of international trade and although the analytical thrust of many models justifies intervention, such policy conclusions are rejected even by those at the forefront of these theories on the grounds of political economy arguments which do not stand up to careful scrutiny. Finally, we show that arguments favouring trade liberalisation are not supported by existing empirical research, which generally fails to capture the complex and ambiguous effects of liberalisation and openness. Copyright 2001 by Oxford University Press.

Suggested Citation

  • Deraniyagala, Sonali & Fine, Ben, 2001. "New Trade Theory versus Old Trade Policy: A Continuing Enigma," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 25(6), pages 809-825, November.
    • Handle: RePEc:oup:cambje:v:25:y:2001:i:6:p:809-25
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    Citations

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    Cited by:

    1. Roberto Alvarez & J. Rodrigo Fuentes, 2006. "Trade Reforms and Manufacturing Industry in Chile," Palgrave Macmillan Books, in: Patricio A. Aroca & Geoffrey J. D. Hewings (ed.), Structure and Structural Change in the Chilean Economy, chapter 4, pages 71-94, Palgrave Macmillan.
    2. Christos N. Pitelis, 2011. "Foreign Direct Investment and Economic Integration," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume III, chapter 1, Edward Elgar Publishing.
    3. Fine, Ben, 2002. "Economics Imperialism and the New Development Economics as Kuhnian Paradigm Shift?," World Development, Elsevier, vol. 30(12), pages 2057-2070, December.
    4. Stojcic, Nebojsa & Becic, Marija & Vojinic, Perica, 2011. "Decision to export and decision to innovate: Empirical evidence on firm behaviour in CEECs and SEECs," MPRA Paper 109129, University Library of Munich, Germany.
    5. Monojit Chatterji & Sushil Mohan & Sayantan Ghosh Dastidar, 2014. "Relationship Between Trade Openness And Economic Growth Of India: A Time Series Analysis," Journal of Academic Research in Economics, Spiru Haret University, Faculty of Accounting and Financial Management Constanta, vol. 6(1 (March)), pages 45-69.
    6. Phocenah Nyatanga, 2017. "Zimbabwe’s Trade Performance Under Alternative Trade Policy Regimes," Foreign Trade Review, , vol. 52(2), pages 90-105, May.
    7. Bernadette Andreosso-O’Callaghan, 2009. "How is the EU-ASEAN FTA viewed by ASEAN stakeholders?," Asia Europe Journal, Springer, vol. 7(1), pages 63-78, February.
    8. K.N. Harilal, 2014. "Regional Cooperation for Whom? A Study of ASEAN–India FTA in the Context of Plantation/Tropical Products," Millennial Asia, , vol. 5(2), pages 137-155, October.
    9. Stergios A. Seretis & Persefoni V. Tsaliki, 2016. "Absolute Advantage and International Trade," Review of Radical Political Economics, Union for Radical Political Economics, vol. 48(3), pages 438-451, September.
    10. Robert Shelburne, 2006. "A Utilitarian Welfare Analysis of Trade Liberalization," ECE Discussion Papers Series 2006_4, UNECE.
    11. Sunanda Sen, 2005. "Forum 2005," Development and Change, International Institute of Social Studies, vol. 36(6), pages 1011-1029, November.
    12. Konstantaras, Konstantinos & Philippas, Dionisis & Siriopoulos, Costas, 2018. "Trade asymmetries in the Mediterranean basin," The Journal of Economic Asymmetries, Elsevier, vol. 17(C), pages 13-20.
    13. M. Parameswaram, 2002. "Economic reforms and technical efficiency: Firm level evidence from selected industries in India," Centre for Development Studies, Trivendrum Working Papers 339, Centre for Development Studies, Trivendrum, India.
    14. Aleh Mazol, 2015. "Exchange Rate, Imports of Intermediate and Capital Goods and GDP Growth in Belarus," BEROC Working Paper Series 32, Belarusian Economic Research and Outreach Center (BEROC).
    15. Ben Fine & Seeraj Mohamed, 2022. "Locating Industrial Policy in Developmental Transformation: Lessons from the Past, Prospects for the Future," Working Papers 247, Department of Economics, SOAS University of London, UK.
    16. Romina Radonshiqi, 2017. "International Trade and Trade Relations in Albania," Noble International Journal of Business and Management Research, Noble Academic Publsiher, vol. 1(3), pages 68-73, March.
    17. David KUCERA & Leanne RONCOLATO, 2011. "Trade liberalization, employment and inequality in India and South Africa," International Labour Review, International Labour Organization, vol. 150(1-2), pages 1-41, June.
    18. Konstantinos Gourzis & Stelios Gialis, 2019. "Dismantled Spatial Fixes in the Aftermath of Recession: Capital Switching and Labour Underutilization in the Greek Capital Metropolitan Region," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 43(4), pages 741-759, July.
    19. Christos N. Pitelis, 2009. "The Sustainable Competitive Advantage and Catching-up of Nations: FDI, Clusters and the Liability (Asset) of Smallness," Management International Review, Springer, vol. 49(1), pages 95-120, February.
    20. Kwame Sundaram Jomo, 2023. "Poor Trade: Liberalization Agreements Undermine Development and Food Security," Development, Palgrave Macmillan;Society for International Deveopment, vol. 66(3), pages 260-269, December.

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