Date of Award

Summer 1971

Document Type

Thesis

Degree Name

Master of Arts (MA)

Department

Economics

Committee Director

Usman A. Qureshi

Committee Member

Kehar S. Sangha

Committee Member

Edward M. Cross

Call Number for Print

Special Collections LD4331.E26C37

Abstract

Attempts have been made recently to empirically test several theories of the basis of international trade. These efforts have been concentrated mainly on the empirical testing of the Heckscher-Ohlin and the classical international trade theorems. The results so obtained are both complementary and conflicting. Although a greater degree of empirical relevance has been observed in the Ricardian model than in the Heckscher-Ohlin theorem, so far no sophisticated effort appears to have been made at the empirical testing of Linder's trade hypothesis.

Linder's thesis is that a country cannot achieve comparative cost advantage in that line of production for which there is no domestic demand. If the occurrence of domestic demand is a necessary condition, Linder postulates, to achieve comparative cost advantage then trade will be most intensive among nations with similar demand structures. In so far as per capita income determines the internal demand structure, so goes the argument, trade between countries of similar per capita incomes will tend to be more intensive.

It is the purpose of this study to empirically test Linder's trade thesis and add further dimension to the existing empirical evidence of the international trade theory. The regression technique has been employed throughout this study to test the hypothesis.

The evidence presented in this study tends to support Linder's thesis. However, the conclusion is not final. The concluding chapter makes several recommendations for further research.

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DOI

10.25777/0nsn-a006

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