ABSTRACT
In Part One we have mentioned many examples of strong export performance associated with success in technical and organizational innovation (the British cotton and pottery industries, the German synthetic dyestuffs and plastics industries, the Japanese automobile and consumer electronics industries). Such examples, although they certainly accord with popular impressions of the time, lack any systematic underpinning in terms of trade theory. Such a theory should of course take into account imports as well as exports, the advantages and disadvantages of trade specialization, the role of natural resources and so forth. In this chapter, therefore, we attempt to relate the wealth of empirical findings on the connections between innovation and trade performance to the general economic theory of international trade.
