Introduction: ‘New directions in international trade theory’

Abstract

This special issue contains nine papers which were invited to a conference themed “NewDirections in International TradeTheory” at theLeverhulmeCentre forResearch on Globalization and Economic Policy at the University of Nottingham, UK. Bernhofen (2009) “Predicting the pattern of international trade in the neoclassical trade model: a synthesis” suggests a unifying framework for pattern of trade predictability in the neoclassical trade theory. His framework is based on the Popperian key characteristic of a scientific theory: the imposition of a restriction on possible outcomes. There are two parts to a theoretical prediction: the identification of a set of conceivable outcomes and a restriction criterion. Applying this apparatus to the neoclassical trademodel reveals a remarkable coherence between the various formulations of the model and allows for an intuitive interpretation of the predictions. In addition, it highlights the intellectual continuity between Ricardo’s (1817) original formulation of comparative advantage and the modern general equilibrium formulations. Traditionally, the trade policy reform literature has assumed that policymakers care mainly about socialwelfare.Motivatedby theobservation that recent tradenegotiations have also been about guaranteeing ‘foreign market access’, the literature has recently started to investigate the effects of policy reforms on both welfare and market access. Falvey and Kreickemeier (2009) “Tariff reforms with rigid wages” extend the trade policy reform literature by incorporating unemployment. They analyze the effects of tariff reforms on welfare and market access in a competitive small open economy