ON THE SMITHIAN ORIGINS OF "NEW" TRADE AND GROWTH THEORIES
Adam Smith (1776) is generally ignored as an international trade theorist in textbooks and surveys because of the common belief that he only confirmed the rule of absolute advantages to explain structure of foreign trade. On the other hand, many textbooks and surveys on growth theories simply overlook Smith’s significant contributions to economic growth theory. However, his vent-for-surplus approach may be interpreted as a pioneering study which stresses the importance of economies-of- scale in explaining the structure of foreign trade. Furthermore, in Smith (1776), both learning by doing and economies-of-scale are crucial to explain long-run economic growth. This short paper addresses to the undeniable influence of Smith's concepts such as "extent of the market", "division of labor", "improved dexterity in every particular workman" and "simple inventions coming from workman" on both recent trade and growth models. The note mainly is based on a schematic outline of Smith's ideas on the nature and causes of the wealth of nations.
History of economic thought, Adam Smith, international trade theory, vent-for-surplus, economies-of-scale, learning by doing, externalities, endogenous growth
Adam Smith is generally ignored as an international trade theorist in textbooks because of the common belief that he only confirmed the rule of absolute advantages, and that, there is nothing "new" in his theoretical explanations about the determination of the structure of and gains from trade. Exceptional views can be found in Myint (1958, 1977), Hollander (1973), Bloomfield (1975) and Hong (1984). His vent-for-surplus approach underlines the importance of the existence of increasing returns to scale and of the technological change resulting from learning by doing for international trade and long-run economic growth. It has a pioneering characteristic from the perspective of the so-called "new" trade and growth theories developed in recent decades. This paper focuses only on this Smithian origins of new theories and demonstrates the main links between the following three aspects: (1) foreign trade, (2) economic growth and (3) Smith's ideas on economies of scale and learning by doing.
long-run economic growthning by doing; technological externalities; approach;
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