In cases where the most efficient scale represents a high proportion of the global market. It would certainly

be difficult for, say, China or Japan to enter wide-bodied aircraft manufacture in competition with

Boeing and Airbus. The frequency with which airframe manufacture is quoted as an example of potential

first-mover advantage, suggests it may be one of very few special cases requiring a large supplier

chain and technological depth. It is not difficult to think of examples of other first movers — for example,

motor-cycles industry in the UK — which have failed to sustain an early advantage. The argument

Is not new; it is a variant of the infant-industry argument for protection against imports. But it reemeiged

in the late 1980s, under the guise of strategic trade theory associated with Paul Krugman. He

suggested that the traditional arguments for nations to allow free trade were undermined. In practice,

however, he has aigued that so few industries meet the right conditions to justify strategic trade policy,

and the gains are so small, that a presumption in favour of free trade is justified.

Vocabulary Notes to Text 4.7.1.4

1. the retention — удержание, сохранение

2. vis-a-vis — по отношению к

3. to sustain — подкреплять, выдерживать, поддерживать

4. under the guise — под видом

66

4.7.1.5. Read and translate the text “Life and Activities of the Nobel Prize Winner, Milton Friedman.”

Answer the questions: 1) When was he awarded the Nobel Prize in Economics? 2) What were

his main published works in economics?

Life and Activities o f the Nobe( l Prize Winner, Milton Friedman

Professor of Economics at the University of Chicago and leading member of the Chicago School.

After a short period of work with the Natural Resources Commission in Washington, Professor

Friedman joined the research staff of the National Bureau of Economic Research in 1937 and

maintained a close association with this important research organization for several years. During

the Second World War he served in the Tax Research Division of the US Treasury. In 1946 he was

appointed Associate Professor of Economics and Statistics at the University of Chicago, and was

working there as Professor of Economics from 1948 until he retired in 1979. In 1976 he was awarded

the Nobel Prize in Economics by the Royal Swedish Academy of Science. His main published

works in economics include Taxing to Prevent Inflation (1943), Essays in Positive Economics (1953),

A Theory of the Consumption Function (1957), A Program for Monetary Stability (1960), Price Theory

(1962), A Monetary History of the United States 1867—1960 ( 1963), Inflation: Causes and Consequences

(1963), The Great Contraction (1965), The Optimum Quantity of Money (1969), A Theoretical

Framework for Monetary Analysis (1971), An Economist’s Protest: Columns in Political Economy

(1975), Free to Choose. A Personal Statement (1980) and Monetary Trends in the United States and

the United Kingdom (1982).

Friedman has made contributions to the theory of distribution, arguing for an approach in which

high incomes are regarded as a reward for taking risks. He was a leading defender of the Marshallian

tradition in microeconomics (Marshall, A.) and made a methodological defence of classical economics

that stimulated controversy for a decade. His permanent-income hypothesis was also an important

contribution to the theory of the consumption function. His main work, however, was on the

development of the quantity theory of money and its empirical testing. He extended the Fisher equation

(Fisher, I.) to include other variables such as wealth and rates of interest, and made statistical

tests to attempt to measure the factors determining the demand for money to hold. Friedman advocated

strict control of the money supply — preferably in accordance with a simple rule as to how

much growth would be allowed year by year — as a means for controlling inflation. His view that it is

not desirable to fine-tune the economy using stabilization policy (an early adherent to the policy