Trade and Trade Policy for Development by Staffan Burenstam Linder. New York; Washington; London: Frederic A. Praeger, 1967. pp.xi + 179.

Hymen P. Minsky

Abstract


Linder's theme is that conventional trade theory, as set out
in the theories of comparative advantage and the compatibility of
internal and external equilibrium, as well as the traditional free trade
rules for trade policy are not valid for developing countries. He
creates a trade model for developing countries in which internal
equilibrium, in the sense of capacity income, and external
(balance-of-payments) equilibrium are not compatible. Under these
circumstances the need to satisfy the external equilibrium requirement
dominates; this leads to a reduction of domestic output below capacity
output. The existence of excess capacity in the midst of economic
backwardness effectively retards continued investment and economic
growth. Thus, the role of trade policy is to facilitate the achievement
of capacity output

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DOI: https://doi.org/10.30541/v8i3pp.500-503

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