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:
“I have no doubt that they lived pretty much the same sort of life in the Homeric age, for men have always thought more of eating than of fighting; then, as now, their minds ran chiefly on the “hot bread and sweet cakes;” and the fur and lumber trade is an old story to Asia and Europe.”
—Henry David Thoreau (1817–1862)
“A theory of the middle class: that it is not to be determined by its financial situation but rather by its relation to government. That is, one could shade down from an actual ruling or governing class to a class hopelessly out of relation to government, thinking of gov’t as beyond its control, of itself as wholly controlled by gov’t. Somewhere in between and in gradations is the group that has the sense that gov’t exists for it, and shapes its consciousness accordingly.”
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