Linder Theory

LINDER HIPOTHESIS

In a world where the globalization takes more place every day, we have seen more countries participating to the world trade. In recent years, the news actors of the worldeconomic are the developing countries which try to be more important and imposing in the world trade. But lots of economists are divided about the benefice or the lost of trading to developing economies.Many of them affirmed that the trade is beneficial, but above all necessary if developing countries want a sustained economic growth and development. In another side, few economists think that toencourage developing economies to take a bigger position in the world trade, lead to a bigger dependency of them relatively to the developed world. This will prevent these nations from being developed.Although economists didn’t find a consensus above this question, it is true that trade has been expanding in most developing countries during the last decade. It’s why we have to understand the tradepatterns in developing economies and their evolution using the Linder theory.
In his theory, the economist Staffan Burenstam Linder gives a hypothesis which says that if two countries have a similardemand structure, they will trade together, more this similarity is important, more the trade will be important. To be clearer, there will always be international trade between two countries with the samepreferences and factor endowments. Still considering that the specialization will give a comparative advantage in the production of differentiated goods between the two nations.
This theory questionsthe validity of the Heckscher-Oklin-Samuelson theory which assures that the relative factor endowments of different countries determine the international trade. This means that a country, which isrelatively well endowed in capital, is expected to produce capital-intensive goods. And a country, which is relatively well endowed in labour, is expected to produce labour intensive goods. However,...