Introduction

This book is on what, following Alfred Marshall, has come to be known as the pure theory of international trade dealing primarily with the determinants of the pattern of trade, gains from trade, and trade policy. Most textbooks in international economics attempt to cover both the pure theory of international trade and what has come to be known as international money (which deals with balance of payments, exchange rates, etc.). One concomitant consequence clearly is paucity of space, with the inevitable result that some topics in pure theory receive only perfunctory treatment. For example, the neotechnology and neofactor proportions theories are often not discussed or the empirical tests of various theories are either not discussed or discussed only as obiter dicta. Furthermore, often the substantial literature, both theoretical and empirical, dealing with intra-industry trade, imperfect competition and increasing returns to scale, are neither adequately discussed nor systematically assimilated in the existing textbooks. Again, very few textbooks have considered the recent dynamic models dealing with endogenous growth and international trade.