Norman in Nobel Quotation

American, Paul Krugman won this year's Nobel Prize in Economics. NHH professor Victor Norman's early contributions to the field were included in the Nobel committee's decision. Both of the professors specialize in international trade.

23.10.2008 - ens Frølich Holte (translated by Jessica Hartenberger)

Victor Norman's research contributions were published in 1980 in the very influential book, International Trade by Avinash Dixit and Norman, which, the Nobel committee says built upon Norman's unpublished notes from 1976 - 1978. At the end of the 1970s, Krugman and Norman actually worked on the same model and problems - without knowing one another. Krugman's first article in the field was published in 1979.

"It is fantastic that Krugman received the prize this year. It is especially nice that the prize was awarded to an academic area in which one has worked on developing," says Norman.

Comparative advantage

Krugman, amoung other things, recieved the prize for his work in explaining international trade trends. Here, the theory of comparative advantage is central - a country will export a good that it is relatively best at producing. Thereby, fairly dissimilar countries have the best foundation for trading with one another. Meanwhile, in reality, this isn't so.

"According to the theory of comparative advantage, Norway should trade a great deal with the Ivory Coast. This is not the case. Our largest trade partner is in fact Sweden," Norman points out.

Krugman has expanded the theory of comparative andvantage to explain why a great deal of world trade takes place between industrialized countries - and why two countries will export very similar goods to one another. This is often referred to as new trade theory.

"A part of the explanation is product differentiation and scale advantages," says Norman.

STUDENT AND TEACHER. Rector Jan I. Haaland was taught new trade theory by Victor D. Norman in the 1970s.

Foto: Kristian Tindeland Marthinsen

Lecture theme in 1978

Rector Jan I. Haaland was a student at NHH when Victor Norman taught these themes at the end of the 1970s. Like Norman, Haaland is very happy that this year's Nobel Prize was awarded to Paul Krugman and moreover to an academic field he himself works within. He is especially happy that Victor Norman's earlier contributions in the field were emphasized by the Nobel committee.

"I am one of those students who had Norman as a lecturer around 1978-1979 when he lectured on these things. I thought it was so exciting to learn about new trade theory from Norman, and this was before Krugman was published," explains the rector, who after this decided upon trade theory as his main field of study.

And Victor Norman can confirm that.

"I lectured about this at the Høyere avdelingsstudium (an earlier version of the Masters study, red. anm.) in 1978," smiles Norman.