A 200-Year-Old Economic Idea Still Wins Prizes

The Bates Clark Medal is the Nobel prize in economics for young economists (under 40). This year's winner, Dave Donaldson, a Canadian graduate of Oxford and the LSE, has done research on trade economics, an important and still highly relevant area of research. This piece by Ryan Avent sum up Donaldson's work, which is impressive, considering that he is just 38.

The idea that stands out in Donaldson's research is a 200-year-old idea of David Ricardo, namely that trade is not zero-sum if all countries use their comparative advantage. That is, produce what they are best at and import whatever else they need. The fact that there is still work to be done on this idea is that measuring such effects is excruciatingly difficult. As Ryan explains, Donaldson's seminal paper on the trade effect of Indian railroad expansion in the 19th century took a decade of data collection. 

Given that trade is in the news as of late, though mostly for the wrong reasons, this text is a useful reminder of some of the basic concepts behind trade economics. 

PS: If you want to read a slightly nerdy interview with him, have a look here.