Search results

A mainstay of conventional trade theory, the Heckscher‐Ohlin theorem, dates back to an article published in 1919 by the Swedish economist Eli Heckscher. Bertil Ohlin, a student of Heckscher's, developed the ideas in greater detail in 1933. A footnote in an article by Stolper and Samuelson specifically designated the “Heckscher‐Ohlin theorem” as such.

A review essay on Ronald Findlay, Lars Jonung and Mats Lundahl, eds. Bertil Ohlin: Centennial Celebration (1899–1999). Cambridge, MA: MIT Press, 2002. Pp. xvi, 546. $60.00. The Swedish economist Bertil Ohlin was born in 1899 and died in 1979. Less than half of his professional life he spent as a full time academic scholar in economics. He was a student at the University of Stockholm and was supervised by his teachers, Gustav Cassel and Eli Heckscher. In 1922, Ohlin presented his licentiat thesis where he set out the ideas later conceptualised as the Heckscher-Ohlin model. Two years later, in 1924, he took his doctoral degree under Cassel with a dissertation simply called Handelns teori (The Theory of Trade). A longer version of this dissertation was later published in English as Interregional and International Trade (1933). This work made him a famous trade theorist in a line of tradition going back to Ricardo and Torrens. Paul Samuelson in 1941 coined and immortalised the term “the Heckscher-Ohlin theorem” which he and Wolfgang Stolper developed further in a famous article in the Review of Economic Studies (1941) entitled “Protection and Real Wages.” Already at the age of 26 the bright young man Ohlin became a professor in economics at the University of Copenhagen and five years later he was appointed to a chair in the same subject at Handelshogskolan (The Stockholm School of Economics) in Stockholm.

Bertil Ohlin was a most active commentator on current economic events in the interwar period, combining his academic work with a journalistic output of an impressive scale. He published more than a thousand newspaper articles in the 1920s and 1930s, more than any other professor in economics in Sweden.

Here we have collected 10 articles by Ohlin, translated from Swedish and originally published in Stockholms-Tidningen, to trace the evolution of his thinking during the Great Depression of the 1930s. These articles, spanning roughly half a decade, bring out his response to the stock market crisis in New York in 1929, his views on monetary policy in 1931, on fiscal policy and public works in 1932, his reaction to Keynes’ ideas in 1932 and 1933 and to Roosevelt’s New Deal in 1933, and, finally, his stand against state socialism in 1935.

At the beginning of the depression, Ohlin was quite optimistic in his outlook. But as the downturn in the world economy deepened, his optimism waned. He dealt with proposals for bringing the Swedish economy out of the depression, and reported positively on the policy views of Keynes. At an early stage, he recommended expansionary fiscal and monetary policies including public works. This approach permeated the contributions of the young generation of Swedish economists arising in the 1930s, eventually forming the Stockholm School of Economics. He was critical of passive Manchester liberalism, ‘folded-arms evangelism’ as well of socialism while promoting his own brand of ‘active social liberalism’.

Allyn Young′s lectures, as recorded by the young Nicholas Kaldor, survey the historical roots of the subject from Aristotle through to the modern neo‐classical writers. The focus throughout is on the conditions making for economic progress, with stress on the institutional developments that extend and are extended by the size of the market. Organisational changes that promote the division of labour and specialisation within and between firms and industries, and which promote competition and mobility, are seen as the vital factors in growth. In the absence of new markets, inventions as such play only a minor role. The economic system is an inter‐related whole, or a living “organon”. It is from this perspective that micro‐economic relations are analysed, and this helps expose certain fallacies of composition associated with the marginal productivity theory of production and distribution. Factors are paid not because they are productive but because they are scarce. Likewise he shows why Marshallian supply and demand schedules, based on the “one thing at a time” approach, cannot adequately describe the dynamic growth properties of the system. Supply and demand cannot be simply integrated to arrive at a picture of the whole economy. These notes are complemented by eleven articles in the Encyclopaedia Britannica which were published shortly after Young′s sudden death in 1929.

Reproduces the main texts of hitherto unpublished reminiscences of the style and influence, as a teacher, of Allyn Abbott Young (1876‐1929) by 17 of his distinguished students. They include Bertil Ohlin, Nicholas Kaldor, James Angell, Lauchlin Currie, Colin Clark, Howard Ellis, Frank Fetter, Earl Hamilton, and Melvin Knight (brother of Frank Knight who, with Edward Chamberlin, was perhaps Young’s most famous PhD student). There has recently been a revival of interest in Young’s influence on US monetary thought and in his theory of economic growth based on endogenous increasing returns. These recollections of his students (addressed to Young’s biographer, Charles Blitch) shed light on why Young has, at least until recently, been renowned more for his massive erudition than for his published writings.

Seligman's evaluation of Longfield's work concentrated exclusively on his views on value and distribution as set out in the Lectures on Political Economy. He noted that Longfield adopted many of the doctrines of the classical school but dissented from it in his treatment of distribution above all in his theory of profits (Seligman, 1903, p. 526). Seligman began with an examination of Longfield's ‘noteworthy’ theory of value which takes into account ‘the influence of cost of production upon the supply side of the equation’ as well as calling attention to the demand side (Seligman, 1903, p. 526). In discussing the demand side, Longfield pointed out that although the intensity of demand varies with different persons, all will affect their purchases at the market price. If an attempt was made to raise price above this level, the demanders whose intensity of demand was measured by the former price would cease to be purchasers. ‘Thus the market price is measured by that demand, which being of the least intensity leads to actual purchases’ (Longfield, 1834, p. 113; Seligman, 1903, p. 526). Seligman went on to note that, for Longfield, not only did intensity of demand vary between persons but also that ‘the same person may be said to have in himself several demands of different degrees of intensity’. Longfield wrote:Each individual contains as it were within himself, a series of demands of successively increasing degrees of intensity; that the lowest degree of this series which at any time leads to a purchase, is exactly the same for both rich and poor, and is that which regulates the market price and that in the case of the rich man, the series increases more rapidly, that is to say, the intensity of his demand increases more rapidly in proportion to the diminution of his consumption than in the case of the poor man. (Longfield, 1834, p. 115)

This chapter presents a general equilibrium model that embeds the issue of national security within a two-country Heckscher–Ohlin model of international trade. “National security” is defined as a public good that is an increasing function of a country's own defense expenditure and a decreasing function of the other country's defense expenditure. Defense is a non-traded public good produced by capital and labor, along with two tradable private goods in each country. The model is solved as a Nash equilibrium in defense expenditures and a Walrasian equilibrium for the two traded goods and the factors of production. It is shown that opening to international trade raises defense expenditures in each country since national security is a normal good in each of them. If defense is more capital-intensive than both tradable goods then trade lowers the cost of defense for the labor-abundant country and raises it for the capital-abundant country.

With the present transient status of many countries’ economies, the international textile industry faces considerable challenges. There are many uncertainties surrounding the global textile market, exacerbated by the foreboding that in 2005, quotas will be eliminated, resulting in “free” trade flows. There is no doubt that manufacturers who have created niche markets will be better positioned to compete in the global marketplace and achieve higher margins for products while yielding greater profitability. This paper is an introduction of a larger study that will examine how niche market definitions are being recast, owing to changing global patterns. This paper addresses what role niche markets will play in 2005. Specific objectives are: to give a broad overview of various trade theories, including classical, neo‐classical, post‐neo‐classical, and modern, in order to determine what, theoretically, the future holds for the US textile and apparel industry. Specifically, focus will be given to the issue of specialization as a result of trade; to explain how the specialization advocated by trade economists relates to niche markets in the US textile and apparel industry; to illustrate how traditional marketing methods differ from niche marketing; and to examine what role niche markets will play in the US textile and apparel industry in 2005. The results of this research study will aid in the formulation of a business strategy that can by utilized to capitalize on niche markets and will provide a research framework for global textile researchers.

The authors construct an intertemporal model of rent-maximizing behavior on the part of a timber harvester under potentially multidimensional risk as well as geographical heterogeneity. Subsequently, the authors use recursive methods (specifically, the method of stochastic dynamic programing) to characterize the optimal policy function – the rent-maximizing timber-harvesting profile. One noteworthy feature of their application to forestry in the province of British Columbia, Canada is the unique and detailed information the authors have organized in the form of a dynamic geographic information system to account for site-specific cost heterogeneity in harvesting and transportation, as well as uneven-aged stand dynamics in timber growth and yield across space and time in the presence of stochastic lumber prices. Their framework is a powerful tool with which to conduct policy analysis at scale.