Should Economies Restructure towards Trade?: A Theory for Partial Specialization

Abstract

Abstract: Why should countries trade the amounts, and kinds, of goods that they do, to maximize utility, and should this lead countries to orient their production completely to their trade sectors?  This unorthodox, and primary conceptual article, proposes to answer whether or not completely specializing in goods, under Ricardian trade theory, is absolutely necessary. Many graphs are offered, with linear algebra, and equations, for countries to maximize utility. The main finding is that partial specialization can maximize countries’ utility, negating the need to restructure solely for one good, industry, or sector. The implications for trade, using the United States as an example, are discussed.  Several other original concepts are introduced, including the “box of surety,” and the “ray of satisfaction,” with the idea that trade should capture the same ratio of goods that consumers prefer domestically- “consumption consistency.” Matrix algebra was used, along with general conceptual observations, with the inclusion of how math errors could be made, but future use of Calculus would add to the equational proofs, and, scholars should look for more empirical evidence of partially specialized trade occurring.