Pakistan Institute of Development Economics



A Primer on International Trade by Jan Pen. Random House, New York, 1967.

Jan Pen attempted to deal with the basic questions and institutions of international trade. His main objective was to find out whether trade between countries is a matter of common interest or of conflict. His answer depends on the local situation of each country, i.e., whether they are enjoying full employment and prosperity, or unemployment and depression. The book is divided into three parts. Part one deals with the concepts and philosophy of international trade viewed by the mercantilists and the classical economists, especially Adam Smith and David Ricardo. This part also covers further development and modification of the Ricardian theory of comparative cost, which states that the value of a commodity is solely determined by the amount of labour needed to produce it. There are some developments made on the Ricardian analysis, and specifically those by Haberler and Heckscher-Ohlin philosophy. Professor Pen points up that the Ricardian theory and the Heckscher-Ohlin theory supplement one another; Heckscher-Ohlin theory takes the demand aspect into account — the relative scarcity of labour and capital results from the interaction of supply and demand; the Ricardian approach stresses the supply side. Professor Jan Pen does not go further to state the modifications to the Heckscher-Ohlin theory made by Professor Leontief and others in recent studies in the area of international economics.

Falih Al-Shaikhly

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