Compare the core differences between the neoclassical model of international trade and that proposed by Shaikh (2005), focusing in particular on the fundamental theoretical building blocks of each theory and the larger empirical patterns that each theory predicts. Be sure to explain the significance of the price elasticity of demand in each theory.

With regard to the policy implications of each theory, refer back to P. Sai-wing Ho’s discussion of spontaneous structural change versus activist state policies. What are the issues that Ho is pointing to with regard to policy and how do they relate to the policy implications of the neoclassical and of Shaikh’s rival perspectives?