Economic Geography: An overview
- A willingness to reduce sources of instability in the market
- G20: Principles
- The difficulties of a practical application
- The main contribution of macro-prudential regulation in the control of risks
- The mechanism of pro-cyclicality of credit: What interventions are possible?
- What policy on capital adequacy adopted to insure against the cyclicality?
'The Spirit of Laws', Montesquieu's treatise on political theory was published anonymously in 1748. Montesquieu had always defended the idea that there existed a concept of 'soft trade' between nations. This meant that countries which had trade relations among themselves could not wage war on each other. This idea is still valid today even if the components of international trade have greatly advanced since the days of Montesquieu. Today, the characteristics of international trade are quite different from those that were described in the analysis of the absolute benefits by Adam Smith, or that of David Ricardo's comparative advantages.
Nowadays, international trade is explained by new theories that show why countries that have similar resources trade with each other. Economic Geography is a new subject that analyzes the structure of international trade, something that the new theories on trade do not. This subject highlights a number of assumptions and events in order to try and characterize the structure of international trade, and explain the phenomenon. This excerpt is from the 2008 report on the World Trade Organization (WTO).
This excerpt focuses on a set of new issues that stem from this literature. Economic geography focuses on lowering trade costs as the starting point of analysis, resulting in the emergence of different effects that will be described in the document. It therefore becomes pertinent to ask, in a context of increasing globalization and change, as to what new elements have been introduced by this literature, in the analysis of international trade.
Tags:The Spirit of Laws, Economic Geography, Montesquieu, International trade relations