Global Trade and Conflicting National Interests

by Ralph E. Gomory, William J. Baumol

Ralph Gomory and William Baumol adapt classical trade models to the modern world economy.

In this book Ralph Gomory and William Baumol adapt classical trade models to the modern world economy. Trade today is dominated by manufactured goods, rapidly moving technology, and huge firms that benefit from economies of scale. This is very different from the largely agricultural world in which the classical theories originated. Gomory and Baumol show that the new and significant conflicts resulting from international trade are inherent in modern economies.Today improvement in one country's productive capabilities is often attainable only at the expense of another country's general welfare. The authors describe why and when this is so and why, in a modern free-trade environment, a country might have a vital stake in the competitive strength of its industries.

Genres: Economics

215 pages, Paperback

First published January 22, 2001

Reviews

[Ian Fletcher · Rating 5 out of 5]

This is an epically important book, very profound, and very useful. But it is a work of technical economics and will be rather a hard lift for most readers. I wouldn't buy it unless you have at least a BA in econ. I summarized its ideas in Ch. 10 of my own book Free Trade Doesn't Work.

[Jeff Greason · Rating 4 out of 5]

A potentially important book and one that deserves wider discussion than I've seen. Gomory and Baumol explore the limits of classical trade theory according to Ricardo. The essence of the argument is that while a free, uncoerced trade between individuals always leaves them both better off, if you take collections of them as nations and consider the gross income *of the nations*, that industries which have high startup costs can produce a range of possible outcomes which are dependent on the history of how one gets there, and that as far as one nation is concerned, they're not all equivalent. A powerful but easily misunderstood argument, the authors themselves point out this is not an argument for protectionism. However, my own interpretation is that there is here an argument that intelligent "industrial policy" can potentially make a difference. Whether "intelligent" industrial policy is a thing that can really exist, the authors do not speak to (and I have my doubts) -- but the book provides a strong case that one cannot simply fall back on Ricardian arguments in all cases to show that free trade .. especially free trade between "near-peer" nations -- is always beneficial. Even if in the vast majority of specific cases, the "cures" are probably worse than the "diseases"

[David · Rating 4 out of 5]

Very enlightening little book about trade. Neatly divided into two sections, for general readers and specialists (economists).