Paul Samuelson's Contributions to International Economics

AbstractThis chapter evaluates Samuelson's trade contributions such as the Stolper–Samuelson and factor-prices equalization theorems, as vital in today's globalization debate. The ideas that gain from trade can be modeled through side-payment, that Samuelson added intuitive understanding and easy testing of the Stolper–Samuelson Theory, and that the simple ‘iceberg-cost’ metaphor helped our understanding of transit cost and friction in trade, are very active in the modern scientific and development views of modern trade theory. This chapter spans a wide range of thought from the ‘iceberg-cost’ concepts to a Ricardian ‘continuum of goods’ trade model. In between are financial analysis models, such as the Harrod–Balassa–Samuelson Theorem, according to which the exchange rate increases faster for growing countries, and which has led to the development of the Heston–Summer database for world comparison of income and prices. The chapter also presents a contribution to the transfer problem.