《Krugman’s New Trade Theory and Their Implications》.doc

Krugman’s New Trade Theory and Their Implications 西北大学经济管理学院 经济学基地班 2010103008 蔡菲 【Abstract】Paul Krugman, the American economist which won the Nobel Memorial Prize in Economic Sciences for his contributions to and New Economic Geography in 2008. The New Trade Theory Caused a great repercussion and it will have strong implications for the making of economic and trade policy. This paper is centered on the New Trade Theory and its contribution. In addition to, this paper will talk something about the implications for China. 【Key words】 Paul Krugman New Trade Theory implication China Paul Robin Krugman ( born February 28, 1953) is an American economist, Professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times] In 2008, Krugman won the Nobel Memorial Prize in Economic Sciences for his contributions to New Trade Theory and New Economic Geography. This paper focuses on Krugman’s contribution to the new trade theory. 1 Paul Krugman and the New Trade Theory (1) The pattern of international trade departures from the traditional trade theory The period of Classical economics, Adam Smith and David Ricardo respectively with the point of view that absolute comparative cost and the relatively cost explained the reasons of the the occurrence of trade. Smith believed that there has a production cost gap when the two countries produce the same products and it is the reason for trade. Countries used the means that production cost is lower than other countries in exchange, so they could share the interests which come from the increased production. And the Ricardo further believes that As long as the opportunity cost of the same kind of product in two countries is different, there have reasons of trade between two countries, because the relative prices is different. Smiths theor