Global Trade and Conflicting National Interests
215 pp., 6 x 9 in,
- Published: June 7, 2022
- Published: January 16, 2001
- Published: July 24, 2018
Ralph Gomory and William Baumol adapt classical trade models to the modern world economy.
In this book Ralph Gomory and William Baumol adapt classical trade models to the modern world economy. Trade today is dominated by manufactured goods, rapidly moving technology, and huge firms that benefit from economies of scale. This is very different from the largely agricultural world in which the classical theories originated. Gomory and Baumol show that the new and significant conflicts resulting from international trade are inherent in modern economies.Today improvement in one country's productive capabilities is often attainable only at the expense of another country's general welfare. The authors describe why and when this is so and why, in a modern free-trade environment, a country might have a vital stake in the competitive strength of its industries.
The church of global free trade, which rules American politics with infallible pretensions, may have finally met its Martin Luther. An unlikely dissenter has come forward with a revised understanding of globalization that argues for thorough reformation. This man knows the global trading system from the inside because he is a respected veteran of multinational business. His ideas contain an explosive message: that what established authorities teach Americans about global trade is simply wrong disastrously wrong for the United States.
Combine economies of scale with many industries. Stir in some old theory and some new technique. Out comes a complex and novel picture of a world trading pattern in which national strategy can really matter. This book should be read carefully, but above all it should be read.
Robert M. Solow, Institute Professor of Economics, Emeritus, MIT, and Nobel Laureate in Economics
When you pair a world-class mathematician with a world-class economist, you should be prepared for a spectacular outcome. The Gomory-Baumol book is an apt illustration. They have cast new light on an old finding: the possibility under increasing returns of multiple equilibria, some Pareto-better than others, and each affecting the distribution of gains (in the superior equilibria) differentially. This is a book to be treasured by trade specialists.
Jagdish Bhagwati, Arthur Lehman Professor of Economics, Columbia University
In this lucid, marvelously accessible work, Ralph Gomory and William Baumol draw on the theory of economies of scale in maintaining the viability of established manufacturers. They also consider the possibilities of limited governmental intervention to influence which of the many possible equilibria will be realized.
Herbet E. Scarf, Sterling Professor of Economics, Yale University
This book is a gem and reads like a thriller. John McDonald was a superb business writer who combined an innate understanding of context with an appreciation of strategy. The book should be read by all who are concerned with business reporting, business, and legal advice.
Maritn Shubik, Cowles Foundation for Research in Economics, Yale University