Neither Free Trade Nor Protection

Neither Free Trade Nor Protection

A Critical Political Economy of Trade Theory and Practice

Bill Dunn

This book challenges both sides of the debate around international trade. Most mainstream economists advocate free trade as a mainstay of national and global prosperity. Meanwhile, many critics see trade causing inequality and poverty. Unfortunately, supporters and opponents share many assumptions about trade and the character of the international economy and produce similarly abstract and asocialized theories. Their propositions need to be investigated critically, and in doing so, this book begins the task of assessing when and how trade matters.

Chapter 7: Factor endowments, trade and growth

Bill Dunn

Subjects: economics and finance, political economy, politics and public policy, international politics, political economy


This chapter considers a key proposition of neo-classical trade theory, considering whether countries trade on the basis of ‘factor endowments’, and goes on to ask whether they grow faster when they do so. This addresses what appears to be a gap in the existing literature. As discussed in the last chapter, mainstream approaches support trade, maintaining in particular that it fosters faster national growth. Such links between trade and growth have been extensively debated and while there is still argument, the balance of evidence supports some positive association. As will be explained below, following Heckscher and Ohlin (H–O), mainstream trade theory goes on to suggest that trade should be based on ‘factor endowments’. Here again there is a considerable literature, debating whether or to what extent countries do, in fact, trade on the basis of their endowments as Heckscher and Ohlin conceived them. Most studies stop at this point. They assume rather than investigate the link between the two ideas. The fact that the connections between trade and growth and between factor endowments and trade are at most statistical tendencies invites the crucial supplementary question of whether or to what extent trading based on factor endowments is good for growth. Some authors explicitly assume that trading on the basis of factor endowments is particularly beneficial.

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information