Current Issues In Trade Theory

Generally speaking, the Indian syndrome is that good researchers do not write textbooks. And those who write textbooks, are bad researchers. Therefore, the texts are bad. Add to this the fact that most Indian economists who have done good work on international trade theory are non-resident Indians, a la Bhagwati and Bardhan.

Admittedly, the Indian syndrome of good economists not writing textbooks does seem to be changing. However, the change is restricted to microeconomics, macroeconomics and development economics. International trade theory is not part of this revolution. Just as exports were a residual for most Indian companies, international economics was also a residual for most Indian economists. A student who is interested in trade is perforce constrained to resort to Western texts.

 

The present volume is yet another addition to this list of Western texts. More accurately, it is a reincarnation of an earlier text. The first edition was published in 1985 and was the pilot for Macmillan's Current Issues series of textbooks on economics. Since the series was well-received, the pilot has now been rehashed as a second edition, to integrate it with the rest of the series.

Broadly speaking, the first edition had a theoretical section and an empirical section. In the transition from the first edition to the second, the theoretical essays have been left largely untouched. Ten years is not long enough for profound changes in trade theory to take place! The empirical essays have, however, been redone. The essay on the political economy of protection also involves much more than a scissors and paste job. In addition, the essay on strategic trade policy is new.

Before one begins to recommend this text to all undergraduate students of economics in India as a good text, a few things need to be spelt out. First, this volume cannot be, and had no intention of being, a core textbook on international economics. It is meant to be a supplementary text and will often not make much sense to those who have not waded through a basic text.

Second, the book is labelled as an undergraduate text. Whatever might be true of other countries, for the Indian market it is nothing of the kind. This volume is an advanced text, appropriate for those who have specialisations in international economics at the Masters level. The essays take the reader up to the frontiers of research.

Third, the editor has not written an introduction to knit the various essays together thematically. Given the heterogeneity of terrain covered, David Greenaway would have found this a difficult task to accomplish. But it would have been well worth the effort. For instance, many people still remember the Penguin Growth Economics volume for Amartya Sen's introduction, not for the individual essays.

Fourth, although the book is part of the Current Issues series, the essays really cover recurrent issues in international trade. The choice of areas tends to be somewhat arbitrary. This is not to deny that the areas chosen are important but there are other areas of international trade that are currently much more important. As so often happens in such cases, these areas were excluded presumably because it is a difficult task to readily identify good people to write on those topics.

Having said that, it is necessary to point out that each author is exceedingly good, and this is reflected in the quality of the essays. There are nine such essays. Henryk Kierzkowski on models of international trade in differentiated goods, Ian Steedman and J S Metcalfe on capital goods and the pure theory of trade, J Peter Neary on the theory and policy of adjustment in an open economy. P K M Tharakan and G Calfat write on empirical analyses of international trade flows while Bruno S Frey and Hannelore Weck-Hannemann examine the political economy of protection.

The rest of the collection includes essays by Klaus Stegemann on strategic trade policy, Carl Hamilton and G V Reed on economic aspects of voluntary export restraints, Chris Milner on the empirical analysis of the welfare effects of commercial policy and Ali M El-Agraa on international economic integration.

Since the essays are invariably well-written, any mention of the good ones is apt to be subjective and reflect one's own biases. Subject to that, the essays on strategic trade policy and the political economy of protection are good. The one on international economic integration could have done with substantial rewriting. Post-Uruguay Round, the essay on voluntary export restraints should also have been revised. In the last paragraph, there is a reference to MFA quotes being progressively abolished in the Uruguay-Round agreement. However, grey area measures like voluntary export restraints have also become illegal now. Failure to mention this indicates that the authors have no more than a passing acquaintance with Gatt

Given the disparate subjects covered and the abundance of algebraic formulae and regression equations, it is impossible to say more on what specific essays have to say. Certainly not in the space of a book review. However, Masters level students of international economics will find this volume a useful addition to their libraries. The general reader will find most of it too abstract and esoteric.