Understanding Global Trade Hardcover – May 25 2011
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Elhanan Helpman is among the foremost trade theorists of his generation. In this splendid book, he demonstrates that he can also write successfully for the public. This is welcome news for those who value an informed democracy. (Jagdish Bhagwati, author of In Defense of Globalization)
The explosion in global trade over the past few decades is the defining economic phenomenon of our lifetimes, yet even professional economists struggle to understand its complexities. Understanding Global Trade explains, in a clear and non-technical style, important and exciting insights from the frontiers of research in international trade. Anyone interested in understanding the nuances of globalization should read this book. Elhanan Helpman is an immensely influential researcher who has towered above the field of international trade for more than three decades. With this wonderful book, his research ideas, and those of others in the field, will become known to a whole new audience. (Kenneth Rogoff, co-author of This Time is Different)
Elhanan Helpman's Understanding Global Trade is a masterpiece of non-mathematical, fully understandable, but still rigorous, exposition. Within five chapters Helpman takes the reader from the classical theories of international trade, comparative advantage and Heckscher-Ohlin, to the modern theories that explain today's global trading world--of multinational firms, of outsourcing and outshoring, of why some firms export and others remain firmly local--and why it matters. (Stanley Fischer, Governor, Bank of Israel)
About the Author
Elhanan Helpman is Galen L. Stone Professor of International Trade at Harvard University and the author of many research articles and books.
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Most Helpful Customer Reviews on Amazon.com (beta)
The premise and tone of this book I would say are firmly within the pro free trade economic establishment, as there is little mention of any contention or dissatisfaction with the status quo. The book deals in the objective empirical questions of why global trade patterns form in a certain way, and not in the more reflective or moral questions of where these patterns are leading different countries, which are the questions which appeal more to me and perhaps also the general interest reader.
The first part of the book deals with the fundamental and essential foundation principle of comparative advantage, which in my view everyone should be taught at school. But if you are not already hot on this subject perhaps a standard textbook would be more appropriate.
As an example of its content, the later part of the book deals in detail with summarising the academic progress made in understanding and predicting when and where international production patterns involve offshoring through owned foreign subsidiaries or outsourcing to independent firms. This part of the book reminded me of a good business economics book I read years ago about the way that the make up and ownership patterns of all firms are influenced by the pros and cons of different contractual arrangements, different incentives and different principle agent issues. I mention this as it gives an indication as to the themes and approach of this book; it is hardcore economics complete with equations and diagrams, and arguably not really general interest.
I definitely learnt a few points from this book. For example; the "home market effect", the theory that firms in large countries with a large home market have an in built advantage. Or secondly that it can be useful to differentiate sectors or products into contract-intensive and non-contract intensive, and that it can be shown that supply chains which require detailed enforcible complex contracts end up being produced in countries with capable infrastructure to provide this. Or thirdly "tariff jumping" where companies choose to invest in a subsidiary producer in the previously importing country to avoid the tariffs being levied. (Toyota building US factories in response to the US protection of its car market in 1973 is given as an example).
So I was glad I bought this book, and I hope this review has helped the right people to buy it / not buy it also.
The selection of topics is, as Helpman admits, somewhat biased and reflects his personal research interests. A lot of emphasis is put on "pure" trade theory (including the extensions and ramifications of the classical and neoclassical approaches), as well as the impact of trade on income distribution and labour markets. There is much less coverage of policy issues or the political economy of protectionism. Although there is a long chapter on classical trade theory, Paul Samuelson's 2004 article on potential drawbacks of globalization in a Ricardian model, as well as the subsequent debate, is surprisingly missing. Equally astonishing, not a single piece of work by Dani Rodrik, trade and development specialist at Harvard, is quoted. On the other hand, the book's simplified presentation of the Melitz model on trade with heterogeneous firms, rather hard stuff in its original version, is just brilliant. Moreover, the book's bibliography is as gigantic as an Ultra Large Container Vessel. Thus, those who look for a complement to an International Economics textbook or who are interested in a review of recent literature undertaken by a champion in his field will find it highly useful.
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