Basically Krugman’s theory explained why countries were trading the same kinds of goods. Traditionally trade theory had focused on countries regional advantages in producing, and therefore trading goods. The example he uses is the south sending bananas to the north and the north sending wheat to the south.
Without going into too much detail (both because I am not sure I have my head wrapped around and because you can watch the video for that). A few things are especially interesting about what Krugman says. First, he says that it all seems obvious now. It’s amazing to me how everyone can miss something in the moment that seems so obvious in retrospect. Second, his trade theory is all about scale, it’s focused around the collection of efficiency that comes with the production/sale of more goods (scale, of course, is a fundamental part of network theory as well). Third, it’s when Krugman says that everyone was focused on why countries were producing the things they were producing and it didn’t really matter. Again, like the retrospect example, I like stories of everyone missing something because they were staring the wrong direction.
Think I might work on a longer entry about this Krugman stuff, but this will do for now.