Vent for surplus is a theory that was formulated by Adam Smith and later revised by

Hla Myint Hla Myint ( my, လှမြင့် ; 1920 – 9 March 2017) was a Burmese economist noted as one of the pioneers of development economics as well as for his contributions to welfare economics. He stressed, long before it became popular, the i ...

on his thesis of South East Asia. The theory states that when a country produces more than it can consume, it produces a surplus. This underutilization causes an inward movement on the production possibilities frontier. Trade with another country is then used to vent off this surplus and to bring the production possibilities in the frontier back to full capacity. Concerning the classical formulation of the theory (by Adam Smith), John Stuart Mill, in his ‘’

Principles of Political Economy ''Principles of Political Economy'' (1848) by John Stuart Mill was one of the most important economics or political economy textbooks of the mid-nineteenth century. It was revised until its seventh edition in 1871, shortly before Mill's death ...

’’ says, that the “vent for surplus” approach is “in truth a surviving relic of the Mercantile Theory, according to which, money being the only wealth, selling, or in other words, exchanging goods for money, was (to countries without mines of their own) the only way of growing rich — and importation of goods, that is to say, parting with money, was so much subtracted from the benefit.”, p.

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References

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External links

Vent for Surplus
on "economyprofessor.com" (via

Internet Archive The Internet Archive is an American digital library with the stated mission of "universal access to all knowledge". It provides free public access to collections of digitized materials, including websites, software applications/games, music, ...

; version 2011-03-12; accessed 2019-06-13). International trade theory Adam Smith {{economics-stub