Paul Samuelson’s Contributions to International Economics

By Kenneth Rogoff1, Harvard University

Introduction
Paul Samuelson’s contributions to trade theory and international economics are
simply breath-taking. Virtually every undergraduate or graduate student, anywhere in the world, will be asked to understand his Stolper-Samuelson and factor-price equalization theorems. These theorems tell us, of course, why trade liberalization tends to benefit the relatively abundant factor of production (skilled labor, in the case of the United States), and why trade in goods can, in many respects, equalize opportunities just as effectively as trade in people and capital. Indeed, it is a very safe bet that whoever the great economist of the 22nd century turns out to be, he or she will be teaching and reinvigorating ideas Samuelson articulated during the middle part of the 20th century.
Achieving eternal life in the pantheon of trade giants is already an extraordinary
feat. What is perhaps even more remarkable about Samuelson’s trade contributions is
their vitality in today’s globalization debate. Whereas few taxi drivers in Shanghai have ever been to college much less graduate school (something one cannot assume in Cambridge, Massachusetts), they will still understand that trade with the United States is raising the wages of Chinese workers, just as most Americans understand that the country’s shrinking manufacturing base has more than a little to do with international trade. Indeed, the rising wage differential between skilled and unskilled workers in the United States (and throughout the advanced economies) stands as one of the most contentious and difficult economic and political issues of our day. There is still a great deal of disagreement about what drives this growing differential, and in particular how much is due to globalization, and how much is due to changing technologies that favor skilled labor. Regardless, Samuelson’s ideas contributed greatly to building the framework that economists use for asking such questions and for quantifying potential answers.
In this short essay, I will not attempt any technical exposition of Samuelson’s core trade theories, since one can find these (at various levels) in any economics textbook, from introductory to advanced (including, of course, the many generations of

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