Trade and Economic Growth

Paul S. Segerstrom
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Paul S. Segerstrom: Stockholm School of Economics

Chapter 19 in Palgrave Handbook of International Trade, 2013, pp 594-621 from Palgrave Macmillan

Abstract: Abstract In the widely used textbook International Economics: Theory and Policy by Paul Krugman and Maurice Obstfeld (2009), a case is made for why free trade is better than protectionism. It is argued that the conventionally measured costs of deviating from free trade are large, that there are additional benefits from free trade that add to the costs of protectionist policies when there are economies of scale in production, and that any attempt to pursue sophisticated deviations from free trade is likely to be subverted by the political process. While all of these arguments are important, one of the potentially most important reasons for favouring free trade is not presented in standard textbooks like Krugman and Obstfeld: namely, that trade liberalization promotes technological change.

Keywords: Trade Liberalization; Skilled Labour; Trade Cost; Unskilled Labour; Relative Wage (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1007/978-0-230-30531-1_19

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