Skip to main content

The Neo-Ricardian Trade Theory and the New Theory of International Values

Part of the Evolutionary Economics and Social Complexity Science book series (EESCS,volume 7)

Abstract

Ricardo’s (On the principles of political economy, and taxation, 1817) theory of comparative advantage is the first rigorous theory that demonstrates that free trade benefits every country. He explained his theory using a numerical example of two countries and two commodities. However, the fact that the theory cannot be true when we expand his model to the multicountry and multicommodity case, or to the model that assumes intermediate goods, became clear. Following the study by Graham (Q J Econ 46:581–616, 1932) and McKenzie (Rev Econ Studies 21: 165–180, 1954), the neo-Ricardian theories of international trade as developed by Steedman (Fundamental issues in trade theory, Macmillan, London, 1979) reconsidered gains from trade and showed the possibility of losses from free trade. Recently, Shiozawa (Evol Inst Econ Rev 3: 141–187, 2007) indicated the differences in the number of countries and goods and analyzed cases in which prices did not depend on demand but were determined by production cost. This chapter surveys the development of trade theories and analyzes the gains from trade using the most generalized model. Furthermore, it also considers how the new theory of international values proposed by Shiozawa (Evol Inst Econ Rev 3: 141–187, 2007) provides a new horizon to the previous results.

Keywords

This is a preview of subscription content, log in via an institution.

Buying options

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   109.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   139.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   139.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    Chipman (1965) is a survey article on the development of pure theory after Ricardo (1817). Emmanuel (1973) is the most famous book that criticizes the applicability of the comparative advantage theory to the real world.

  2. 2.

    Important articles are collected in the study by Steedman (1979).

  3. 3.

    See, for example, Montani (1975), Kurz (1978), and Takamasu (1983).

  4. 4.

    Nikaido (1961, pp. 157–158).

References

  • Amano, A. (1966). Intermediate goods and the theory of comparative advantage: A two-country, three-commodity case. Weltwirtshaftliches Archiev, 96, 342–345.

    Google Scholar 

  • Chipman, J. S. (1965). A survey of the theory of international trade: Part 1, the classical theory. Econometrica, 33, 132–147.

    Google Scholar 

  • Emmanuel, A. (1973). Unequal Exchange. New Left Books.

    Google Scholar 

  • Graham, F. D. (1932). The theory of international value. Quarterly Journal of Economics, 46, 581–616.

    Article  Google Scholar 

  • Jones, R. W. (1961). Comparative advantage and the theory of tariffs: A multi country model. Review of Economic Studies, 28, 161–175.

    Article  Google Scholar 

  • Kurz, H. D. (1978). Rent theory in a multisectoral model. Oxford Economic Papers, 30, 16–37.

    Article  Google Scholar 

  • McKenzie, R. W. (1954). Specialization and efficiency in world production. Review of Economic Studies, 21, 165–180.

    Article  Google Scholar 

  • Mill, J. S. (1852), Principles of Political Economy with Some Applications to Social Philosophy, Third Edition, London. The Collected Works of John Stuart Mill, Volume II – The Principles of Political Economy with Some of Their Applications to Social Philosophy (Books I-II), ed. John M. Robson, introduction by V. W. Bladen (Toronto: University of Toronto Press, London: Routledge and Kegan Paul, 1965).

    Google Scholar 

  • Mirrlees, J. A. (1969). The dynamic non-substitution theorem. Review of Economic Studies, 36, 67–76.

    Article  Google Scholar 

  • Montani, G. (1975). Scarce natural resources and income distribution. Metroeconomica, 27, 68–101.

    Article  Google Scholar 

  • Negishi, T. (1981). Classical economics and modern economics. Iwanami Publishing. (in Japanese).

    Google Scholar 

  • Negishi, T. (1983). History of economics. Toyokeizaishinposha. (in Japanese)

    Google Scholar 

  • Nikaido, H. (1961). Linear mathematics for economics. Baifukan. (in Japanese)

    Google Scholar 

  • Ricardo, D. (1817), On the Principles of Political Economy, and Taxation.

    Google Scholar 

  • Samuelson, P. A. (1975). Trade pattern reversals in time-phased Ricardian systems and international efficiency. Journal of International Economics, 5, 309–363.

    Article  Google Scholar 

  • Shiozawa, Y. (2007). A new construction of Ricardian trade theory a many-country, many-commodity case with intermediate goods and choice of production techniques. Evolutionary and Institutional Economics Review, 3, 141–187.

    Article  Google Scholar 

  • Smith, M. A. M. (1979). Intertemporal gains from trade. Journal of International Economics, 9, 239–248.

    Article  Google Scholar 

  • Steedman, I. (1979). Fundamental issues in trade theory. London: Macmillan.

    Book  Google Scholar 

  • Steedman, I. & J.S. Metcalfe (1973), On foreign trade, Economia Internazionale, pp. 516–528, reprinted in Steedman (1979).

    Google Scholar 

  • Takamasu, A. (1983). Neo-Ricardian rent theory. Keizai Ronso, 132, 119–140. (in Japanese)

    Google Scholar 

  • Takamasu, A. (1986). Production possibility frontier in a Sraffa-Leontief economy. The Manchester School, 59, 202–207.

    Article  Google Scholar 

  • Takamasu, A. (1991). Neo-Ricardian trade theory. Sobunsha. (in Japanese)

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Akira Takamasu .

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 2017 Springer Science+Business Media Singapore

About this chapter

Cite this chapter

Takamasu, A. (2017). The Neo-Ricardian Trade Theory and the New Theory of International Values. In: Shiozawa, Y., Oka, T., Tabuchi, T. (eds) A New Construction of Ricardian Theory of International Values. Evolutionary Economics and Social Complexity Science, vol 7. Springer, Singapore. https://doi.org/10.1007/978-981-10-0191-8_5

Download citation

Publish with us

Policies and ethics