INVESTMENT AND TRADE 191 with respectable sponsorship,deriving bits and pieces of its inspira- tion from the writings of such persons as Williams,Kindleberger, MacDougall,Hoffmeyer,and Burenstam-Linder.1 Emphases of this sort seem first to have appeared when econ- omists were searching for an explanation of what looked like a persistent,structural shortage of dollars in the world.When the shortage proved ephemeral in the late 1950's,many of the ideas which the shortage had stimulated were tossed overboard as prima facie wrong.?Nevertheless,one cannot be exposed to the main cur- rents of international trade for very long without feeling that any theory which neglected the roles of innovation,scale,ignorance and uncertainty would be incomplete. LOCATION OF NEW PRODUCTS We begin with the assumption that the enterprises in any one of the advanced countries of the world are not distinguishably dif- ferent from those in any other advanced country,in terms of their access to scientific knowledge and their capacity to comprehend scientific principles.3 All of them,we may safely assume,can secure access to the knowledge that exists in the physical,chemical and biological sciences.These sciences at times may be difficult,but they are rarely occult. It is a mistake to assume,however,that equal access to scien- tific principles in all the advanced countries means equal probabil- ity of the application of these principles in the generation of new products.There is ordinarily a large gap between the knowledge of a scientific principle and the embodiment of the principle in 1.J.H.Williams,"The Theory of International Trade Reconsidered," reprinted as Chap.2 in his Postwar Monetary Plans and Other Essays (Oxford: Basil Blackwell,1947);C.P.Kindleberger,The Dollar Shortage (New York: Wiley,1950);Erik Hoffmeyer,Dollar Shortage (Amsterdam:North-Holland, 1958);Sir Donald MacDougall,The World Dollar Problem (London:Mac- millan,1957);Staffan Burenstam-Linder,An Essay on Trade and Transforma- tion (Uppsala:Almqvist Wicksells,1961). 2.The best summary of the state of trade theory that has come to my attention in recent years is J.Bhagwati,"The Pure Theory of International Trade,"Economic Journal,LXXIV (Mar.1964),1-84.Bhagwati refers ob- liquely to some of the theories which concern us here;but they receive much less attention than I think they deserve. 3.Some of the account that follows will be found in greatly truncated form in my "The Trade Expansion Act in Perspective,"in Emerging Concepts in Marketing,Proceedings of the American Marketing Association,December 1962,pp.384-89.The elaboration here owes a good deal to the perceptive work of Se'ev Hirsch, summarized in his unpublished doctoral thesis,"Loca- tion of Industry and International Competitiveness,"Harvard Business School, 1965.INVESTMENT AND TRADE 191 with respectable sponsorship, deriving bits and pieces of its inspira￾tion from the writings of such persons as Williams, Kindleberger, MacDougall, Hoffmeyer, and Burenstam-Linder.l Emphases of this sort seem first to have appeared when econ￾omists were searching for an explanation of what looked like a persistent, structural shortage of dollars in the world. When the shortage proved ephemeral in the late 19501s, many of the ideas which the shortage had stimulated were tossed overboard as prima facie wrong.2 Nevertheless, one cannot be exposed to the main cur￾rents of international trade for very long without feeling that any theory which neglected the roles of innovation, scale, ignorance and uncertainty would be incomplete. We begin with the assumption that the enterprises in any one of the advanced countries of the world are not distinguishably dif￾ferent from those in any other advanced country, in terms of their access to scientific knowledge and their capacity to comprehend scientific principle^.^ All of them, we may safely assume, can secure access to the knowledge that exists in the physical, chemical and biological sciences. These sciences at times may be difficult, but they are rarely occult. It is a mistake to assume, however, that equal access to scien￾tific principles in all the advanced countries means equal probabil￾ity of the application of these principles in the generation of new products. There is ordinarily a large gap between the knowledge of a scientific principle and the embodiment of the principle in 1. J. H. Williams, "The Theory of International Trade Reconsidered," reprinted as Chap. 2 in his Postwar Monetary Plans and Other Essays (Oxford: Basil Blackwell, 1947) ; C. P. Kindleberger, The Dollar Shortage (New York: Wiley, 1950) ; Erik Hoffmeyer, Dollar Shortage (Amsterdam: North-Holland, 1958); Sir Donald MacDougall, The World Dollar Problem (London: Mac￾millan, 1957) ; Staffan Burenstam-Linder, An Essay on Trade and Transforma￾tion (Uppsala: Almqvist & Wicksells, 1961). 2. The best summary of the state of trade theory that has come to my attention in recent years is J. Bhagwati, "The Pure Theory of International Trade," Economic Journal, LXXIV (Mar. 19641, 1-84. Bhagwati refers ob￾liquely to some of the theories which concern us here; but they receive much less attention than I think they deserve. 3. Some of the account that follows will be found in greatly truncated form in my "The Trade Expansion Act in Perspective," in Emerging Concepts in Marketing, Proceedings of the American Marketing Association, December 1962, pp. 384-89. The elaboration here owes a good deal to the perceptive work of Se'ev Hirsch, summarized in his unpublished doctoral thesis, "Loca￾tion of Industry and International Competitiveness," Harvard Business School, 1965