Adding economists to historians and sociologists in the first sentence of this quotation from the eminent Sinologist, Mark Elvin (1973, p. 17) only enhances its salience. Insofar as they are considered at all in economics, the boundaries of a given economic system or “country” are generally regarded as given, along with the population living within those boundaries. Yet it is obvious that, however sanctified these boundaries may have become in international law, they were all at one time or another contested between rival claimants and determined ultimately by the balance of economic and military power between the contending parties. The process by which these boundaries are determined and defined clearly depends on the interplay of economic and military forces, which have, however, generally been regarded as independent factors.

The purpose of Part 15 is threefold: first, to draw attention to new forms and patterns of world migration; second, to cover aspects of migration that gained only passing expression in the previous Parts of the Surveys and, finally, to assess the significance of global migration flows from ethical and political standpoints.

Often, of course, new forms of migration turn out to be older forms in fresh disguise. Thus it is with contract-labour migration, which Castles succinctly defines as ‘temporary international movements of workers, which are organized and regulated by governments, employers or both’. As he notes, such migration has plenty of precedents – from the Asian indentured labour described in Part 2, the ‘foreign Poles’ who were recruited for industrial work in nineteenth-century Germany, the mine workers in South Africa and the Bracero Program in the USA, to the western European ‘guest-worker’ system. The intention of the employers and the government was twofold: to avoid any long-term commitment to the contracted migrants (thus allowing hiring and firing to match the economic cycles) and to inhibit settlement (thus reducing social costs and lessening the chance of resentment by the local workforce). These two desiderata still remain for many firms and governments. Source countries are now mainly in Asia (a region that provided nearly 12 million contract workers worldwide in the period 1969–89), though, as Castles shows, the Middle East has now declined in importance as a destination area in the wake of the Gulf War and the growth of demand in the emerging hothouse economies of Asia itself.

Adam Smith devoted no less than fifty-six pages of his great treatise to the subject of “the Advantages which Europe has derived from the Discovery of America”, considering Columbus's voyages, and the almost contemporaneous journey to India around the Cape of Good Hope by Vasco da Gama, to be “the two greatest and most important events recorded in the history of mankind.” While the theme of the emergence and expansion of the “The Atlantic economy” has been one of the staple topics of economic historians it is surprising that it does not appear to have made much of an impression in the theoretical literature of international trade, perhaps because of the long Ricardian tradition of defining a “country” as a fixed bundle of resources existing independently of trade rather than as emerging in response to the opportunities opened up by trade itself.

An important feature of the Discoveries was that they should not be considered as having made available at an instant a large additional supply of land and other natural resources. Rather they opened up a new “frontier” where land could be extended indefinitely but only at a rising marginal cost in terms of other real resources. Wilderness had to be cleared before crops could be grown, harvested and gathered. The westward movement of this frontier provided the historian Frederick Jackson Turner (1861–1932) with his famous thesis that it was the influence of this factor that was the key to the experience of American history, accounting for such features as “rugged individualism,” democratic values and entrepreneurial vigor.

De Melo, Panagariya and Rodrik's Chapter 6 serves admirably to provide the intellectual background to the pressing issues of regional integration (RI) to which it is devoted. Starting with the celebrated work of Viner (1950) on the ‘customs union issue’ the last four decades have seen an extensive body of research on the theory and experience of ‘partial’ or ‘limited’ free trade on a ‘preferential’ basis. This literature is lucidly surveyed in section 2 of the chapter. Section 3, which is the most original, opens up some very interesting and novel issues concerned with the institutional dimensions of RI. Section 4 presents new empirical results on evaluating the growth effects of several RI efforts. Altogether this is an extremely meaty and substantive study, not so much one chapter by three authors as one chapter by each of three authors, skilfully blended together. Its value to the profession, in my opinion, will not be confined to the participants of the CEPR/World Bank conference alone.

My comments will be in three parts. The first will be addressed to the survey of the literature in section 2 of the chapter. The second will be concerned with the political economy issues raised by section 3 on the institutional dimensions of RI arrangements. The last will consist of some observations on the broader themes of RI and trade policy raised in this and other chapters in the volume.

TESTING TRADE THEORIES: A COMMENT

I have been asked to focus particular attention on Stern's paper. Stern has, I think, provided us with an excellent, comprehensive survey of trade theories, together with the results and the difficulties of testing these theories. I shall therefore limit my comments to some of the issues he raises concerning the directions in which we should now try to move on both the theoretical and empirical levels.

The present state of trade theory is far from satisfactory. Tests of the Heckscher–Ohlin factor-proportions theory have shown that, at least in its simple form, it does not perform very well in predicting the commodity composition and direction of trade. As yet, however, we do not have a well worked out theory to replace it. We have lots of bits and pieces with which to amend the Heckscher–Ohlin approach, but we do not know how significant each part is or how the parts are tied together. Consequently, most of us, in presenting the pure-theory side of trade to our students, still spend considerable time carefully building up the simple Heckscher–Ohlin–Samuelson trade model and then examining such theorems as the Stopler–Samuelson proposition, the Rybczynski effect, and the factor-price equalization theorem. The appeal of the model, of course, is that it enables us to relate price changes all the way back to the distribution of income.