Abstract
Central to the following discussion is the assertion that a foreign trade policy which maximizes the static efficiency gains from trade may result in reduced dynamic or X-efficiency and thus impair a developing country’s development potential. The dominant view of the relation between international specialization and economic development is summarized. An alternative line of argument is presented in outline. Finally, the implications for development policy are sketched.
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References
Cf. Warren J. Samuels: Economics as a Science and Its Relation to Policy: The Example of Free Trade, in: Journal of Economic Issues, Vol. 14, No. 1, March 1980, pp. 163–185.
Charles P. Kindleberger: Economic Response, Cambridge, Mass., and London 1978, p. 45.
Gottfried Haberler: Der internationale Handel (International Trade). Reprint, Berlin, Heidelberg, New York 1970, p. 3. Frank Graham offered this classical formulation: “It is a matter of mathematics,quite independent of environment, that there is an inherent gain in the specialization along the lines of comparative competence which unshackled trade tends to develop. There isno possible refutation of this analysis. Advocates of a restrictive commercial policy must, inlogic, accept it as afact... Free trade is a ubiquitous and timeless principle” (our italics). To emphasize that this view is endorsed also by modern economists, Bhagwati wrote: “An economist writing today could not have put theessence of the problem better” (our italics). Cf. Frank D. Graham: Protective Tariffs, New York 1934, p. 58 f., and jagdish Bhagwati: The Theory and Practice of Commercial Policy. Special Papers in International Economics, No. 8, January 1978, Princeton University, p. 7.
Cf. Gottfried Haberler, op. cit., Der internationale Handel (International Trade). Reprint, Berlin, Heidelberg, New York 1970, pp. 205 ff., and Harry G. Johnson: Commercial Policy and Industrialization, in: Economica, Vol. 39, 1972. The latter questions not only the practicability of the case for infant industry protection but also its theoretical basis: “Modern theory leaves little, if any, of this argument still standing.” (p. 270).
For the details of the following line of argument cf. Jochen Röpke: Der Einfluß des Weltmarktes auf die wirtschaftliche Entwicklung (The influence of the world market on economic development), in: H. Giersch et al. (eds.): Weltwirtschafts-ordnung und Wirtschaftswissenschaft, Stuttgart and New York 1978, pp. 30–52; by the same author: Probleme des Neuerungstransfers zwischen Ländern unterschiedlicher Entwicklungsfähigkeit (Problems of innovation transfer between countries with different development capacities), in: Ordo, Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, Vol. 29, 1978, pp. 245–279; by the same author: Weltwirtschaftliche Arbeitsteilung bei internationalem Kompetenzgefälle (International division of labour in the case of international competence differentials), in: A. Schüller, U. Wagner (eds.): Außenwirtschaftspolitik und Stabilisierung von Wirtschaftssystemen, Stuttgart, New York 1980, pp. 81–97.
We use the achievement motivation theory (as developed by Atkinson, Heckhausen, McClelland, Weiner and others) to explain entrepreneurial (innovatory) activity. Similar results can be obtained on the basis of the X-efficiency theory of Harvey Leibenstein: Beyond Economic Man. A New Foundation for Microeconomics, Cambridge, Mass., and London 1976; General X-efficiency Theory and Economic Development, New York, London, Toronto 1978.
David Birch, John Atkinson, Kenneth Bongort: Cognitive Control of Action, in: B. Weiner (ed.): Cognitive Views of Human Motivation, New York, pp. 76–77.
Karl Marx: Das Kapital, First Vol., Berlin 1961, pp. 796 f.
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Röpke, J. Free trade, protection and economic development. Intereconomics 16, 26–30 (1981). https://doi.org/10.1007/BF02924726
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DOI: https://doi.org/10.1007/BF02924726