A NEO ‐ RICARDIAN ANALYSIS OF INTERNATIONAL TRADE*

L. Mainwaring

Kyklos, 1974, vol. 27, issue 3, 537-553

Abstract: Countries which have the same no‐trade techniques may still profitably enter into trade, providing that their rates of profit differ, for this implies differences in relative prices. The analysis is conducted by comparing the wage‐profit frontiers appropriate to the production activities in the autarkic and trading equilibria. The motive for trade can be said to be the pursuit of a superior rate of profit‐real wage combination. The ‘gains from trade’ are assessed by comparing the autarky and trade consumption‐growth frontiers. If countries have the same single technique, one country will always gain from trade while the other may lose. If countries have different techniques then both may lose. When each country can choose from a set of techniques then, even if the sets are the same, both may still lose. These possibilities could be avoided in planned economies, whether centralised or decentralised, by ensuring that the maximisation of consumption at a given rate of growth is the objective of trade.

Date: 1974
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