A Critical Political Economy of Trade Theory and Practice
Chapter 11: Conclusions
At first sight the conclusions of this book might seem unsatisfying. There are problems with all the theories and much of the evidence is inconclusive. That is really the point, that a properly critical understanding of trade should not expect neat answers. The evidence suggests that none of the most influential theories, from the beguiling elegance of comparative advantage through to ideas of monopoly and imperfect competition to the opposite pole of unequal exchange and the systematic disadvantage to poorer countries that it posits, provide much help in understanding the complexity of observed patterns of trade. There is evidence that trade is positively associated with growth, albeit neither the levels nor the statistical association warrant economists’ general enthusiasm. Meanwhile, if there is a systematic disadvantage to poorer countries or to primary product exporters, or reciprocally if there is an advantage to rich countries or manufactured commodity exporters, this struggles to emerge from the evidence. At the very least, any such effects were being veiled, presumably by other, stronger economic forces. The book was able to report some interesting and clearly positive results. For example, at least until the 2000s, trade deficits appear to have been conducive to faster national growth, indicating that a pervasive prejudice in favour of trade surpluses is misplaced. Countries do tend to trade, particularly to trade primary products, on the basis of their ‘factor endowments’ as predicted by the neo-classical Heckscher–Ohlin theorem.
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