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).
Famous quotes containing the words trade and/or theory:
“If the world would only build temples to Machinery in the abstract then everything would be perfect. The painter and sculptor would have plenty to do, and could, in complete peace and suitably honoured, pursue their trade without further trouble.”
—Wyndham Lewis (18821957)
“The whole theory of modern education is radically unsound. Fortunately in England, at any rate, education produces no effect whatsoever. If it did, it would prove a serious danger to the upper classes, and probably lead to acts of violence in Grosvenor Square.”
—Oscar Wilde (18541900)