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The Logical Structure of International Trade Theory

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Abstract

In this paper the structuralist approach of theory reconstruction is applied to International Trade Theory. In the basic element the universal laws of the theory are stated and the general concepts are defined in terms of three sets and seven functions. Ricardo’s Theory of Comparative Advantage and the Factor Proportions Theory by Heckscher and Ohlin are reconstructed as specialisations of the basic element. Two intratheoretical constraints are formulated in order to ensure the consistency of the theory. A number of empirical studies are shown to be paradigmatic, successful or questionable applications of International Trade Theory. The reconstruction allows the assessment of the theory from a metatheoretical angle and illuminates the logical interdependencies of its components.

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Notes

  1. See Stegmüller et al. (1982) and Balzer and Hamminga (1989).

  2. Hamminga (1983).

  3. See Balzer (1982, 1985), Stegmüller (1986), Haslinger (1983) and Requate (1991).

  4. Suppes (1957).

  5. Balzer et al. (1987, 1999).

  6. As pointed out by an anonymous reviewer, one way to obtain ITT from the general axioms of Neoclassical Economic Theory would be to interpret the players as countries trading among themselves and concepts like the utility of a country as a measure of the utility of the representative consumers of the country, and so on.

    If ITT is regarded as a specialisation of General Equilibrium Theory, one would have to formulate sufficient conditions for the existence of an equilibrium state of supply and demand, such as assumptions about the preference relations of the agents or the shape of production curves etc.

  7. For instance, in Krugman and Obstfeld’s Standard Trade Model (2003, Chap. 5).

  8. A historical overview of International Trade Theory is given, for instance, in Chipman (1965).

  9. Krugman and Obstfeld (2003, Chap. 5) and Gandolfo (1998, Chap. 3).

  10. See Debreu (1959).

  11. An extensive discussion of these and other gains from trade can be found in Bhagwati (1988).

  12. This type of “measurement” is of course only possible if the statistics in question are available. Otherwise the data needs to be collected first and evaluated statistically.

  13. This classification of intended applications was proposed by Westermann (2000).

  14. MacDougall (1951) and Balassa (1963).

  15. Wood (1994).

  16. Keesing (1966), Chenery and Taylor (1968), Leamer (1984) and Hufbauer (1970).

  17. Leontief (1953).

  18. Maskus and Stern (1981).

  19. Bowen et al. (1987).

  20. The proof can be given as follows:

    (1) (pro a(ui, ck)/fac a(ui, f1, ck))/(pro a(ui, cl)/fac a(ui, f1, cl)) >  (pro a(uj, ck)/fac a(uj, f1, ck))/(pro a(uj, cl)/fac a(uj, f1, cl))

    ass.

    (2) pri a/t(ui, ck, cl) =  |∂τ(ui, ck, cl, pro a/t(ui, ck))/∂xk|

    Def 2 (4)

    (3) pri a/t(ui, ck, cl) =  |−(pro a(ui, cl)/fac a(ui, f1, cl))/(pro a(ui, ck)/fac a(ui, f1, ck))|

    Def 7 (5)

    (4) pri a/t(ui, ck, cl) =  (pro a(ui, cl)/fac a(ui, f1, cl))/(pro a(ui, ck)/fac a(ui, f1, ck))

    (3)

    (5) pri a/t(uj, ck, cl) =  |∂τ(uj, ck, cl, pro a/t(uj, ck))/∂xk|

    Def 2 (4)

    (6) pri a/t(uj, ck, cl) =  |−(pro a(uj, cl)/fac a(uj, f1, cl))/(pro a(uj, ck)/fac a(uj, f1, ck))|

    Def 7 (5)

    (7) pri a/t(uj, ck, cl) =  (pro a(uj, cl)/fac a(uj, f1, cl))/(pro a(uj, ck)/fac a(uj, f1, ck))

    (6)

    (8) (pro a(uj, cl)/fac a(uj, f1, cl))/(pro a(uj, ck)/fac a(uj, f1, ck)) >  (pro a(ui, cl)/fac a(ui, f1, cl))/(pro a(ui, ck)/fac a(ui, f1, ck))

    (1)

    (9) pri a/t(uj, ck, cl) >  pri a/t(ui, ck, cl)

    (4), (7), (8)

    (10) exp t(ui, uj, ck) > 0 \(\wedge\) exp t(uj, ui, cl) > 0

    Def 2 (7), (9)

    .

  21. The Heckscher–Ohlin Theorem, the Factor–Price-Equalisation Theorem, the Stolper–Samuelson Theorem and the Rybczynski Theorem are also referred to as the Four Core Theorems of the Neoclassic Theory of International Trade.

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  1. Centre for Logic, Language and Computation, Victoria University of Wellington, PO Box 600, Wellington, 6012, New Zealand

    Frieder Lempp

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Lempp, F. The Logical Structure of International Trade Theory. Erkenn 69, 227–242 (2008). https://doi.org/10.1007/s10670-008-9110-5

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