FOREIGN TRADE, ECONOMIC DEVELOPMENT AND TRADE THEORY: EXPLORING MANY FACETS In 2008, Paul Krugman has been awarded the Nobel prize in economics for his contribution in the field of 'New Trade Theory', namely, the theory of Intra-Industry trade in differentiated products based on Increasing returns to scale and monopolistic competition and product diversity (apart from his idea of economic geography and agglomeration of economic activities and location of production) A large volume of trade occurs due to variety-seeking utility maximizers' penchant for trade in diversified products in same industry which traditional Neo-classical theory could not handle.
The volume includes thematic cross-country topics such as intra-industry trade between established and new EU member states; foreign direct investment in the new EU borderland; structural change and trade integration at the EU borderland; effects of restructuring on growth and employment; and institutional reforms and evolution of industry, trade, and technology in the EU borderland.
42) Results from a 2001 study concluded that intra-industry trade in the service sector is probably of similar magnitude as intra-industry trade in goods.
Altogether, elaboration of an advanced economic and legal framework to serve as a reliable and durable foundation for the growth of intra-regional and intra-industry trade and investment flows appears as a necessary condition for enhancing and sustaining intra-regional trade and investment flows.
The following papers were discussed: Kyoji Fukao, Hitotsubashi University, and Keiko Ito, ICSEAD, "Vertical Intra-Industry Trade and the Division of Labor in East Asia" Discussants: Chin Hee Hahn, KDI, and Ho-Mou Wu, National Taiwan University Carolyn L.
It is remarkable how much of the growth in international trade is intra-industry trade n that is two countries both exporting to each other within the same type of product.
