New trade theory (NTT) is a collection of economic models in international trade which focuses on the role of increasing returns to scale and network effects, which were developed in the late 1970s and early 1980s.
New trade theorists relaxed the assumption of constant returns to scale, and some argue that using protectionist measures to build up a huge industrial base in certain industries will then allow those sectors to dominate the world market.
Less quantitative forms of a similar "infant industry" argument against totally free trade have been advanced by trade theorists since at least 1848 (see: History of free trade).
Read more about New Trade Theory: The Theory's Impact, Econometric Testing, History of The Theory's Development
Famous quotes containing the words trade and/or theory:
“Whatever trade one is in, one will find some fault with it.”
—Chinese proverb.
“The weakness of the man who, when his theory works out into a flagrant contradiction of the facts, concludes “So much the worse for the facts: let them be altered,” instead of “So much the worse for my theory.””
—George Bernard Shaw (1856–1950)