Growth and Trade

Classical literature was very much concerned with a country’s wealth by means of international trade – in other words, with the effect of trade on economic growth and development. In the post-Second World War period, the theoretical literature has been largely concerned with the effect of growth on international trade, rather than the converse. Interest in this second direction of causation arose from considerations given to the secular dollar shortage, which led to Hicks’ important inaugural lecture [13]. The classical direction of causation has also returned the attention of economists to a concern for the problems of developing countries. It is helpful, therefore, to divide this section into two parts.