Vent For Surplus Approach
Professor Williams has sponsored the doctrine of vent-for-surplus form the crude idea found in the classical theory of international trade presented by Adam Smith in the wealth of nations. Smith stated that foreign trade “carries out that surplus part of the produce of their (trading countries) land and labour for which there is no demand among them and brings back in return for it something else for which there is a demand, it gives a value to their superfluities, by exchanging them for something else, which may satisfy a part of their wants and increase their enjoyments. By means of it the narrowness of the home market does not hinder the division of labour in any particular branch of art or manufacture from being carried to the highest perfection”. This means international trade overcomes the narrowness of the home market and by increasing the size of the market provides an outlet (vent) for the surplus generated into domestic market. On this thread of argument, the vent-for-surplus theory of international trade is developed by modern economists like Williams, Myint etc. to explain the nineteenth-century process of expansion of foreign trade to the underdeveloped countries of the South-East Asia, Latin America and Africa.
The vent-for-surplus approach especially seeks to provide an explanation of how colonial underdeveloped countries had entered into foreign trade.
The theory asserts that an underdeveloped country usually tends to have some commodity (mostly primary products) in surplus when its domestic demand is completely satisfied. This surplus is it’s exportable. Or it may have some unused/idle resource-raw arterials which can be exported once a trade opening takes place.
A market difference between the classical theory and vent- for- surplus theory is that the former assumes that the trading country operates on its production possibility frontier both before as well as after trade (owing to the assumption to full employment condition). The later theory, on the other hand, more realistically presumes that the country is operating below its production possibility (PP) curve.
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