Helpman take the award, in the words of the jury’s citation, for “his fundamental contributions to the understanding of modern international economics and of economic growth.” On receiving the news, Helpman expressed his profound satisfaction “because I know it has gone in the past to extremely distinguished economists, and I feel honored to join them.”

Helpman, an Israeli national born in the former Soviet Union, spent his childhood in Poland and later Israel, where he studied economics. In 1971, he moved to the United States to complete his training at Harvard University. After many years on the faculty at Tel Aviv University, he returned to Harvard to take up the post of Professor of International Trade, which he combines with his leadership of the Program on Institutions, Organizations and Growth of the Canadian Institute for Advanced Research.

Originally drawn to the study of engineering, his mind was changed for him during military service in Israel, when a female comrade lent him Paul Samuelson’s book Economics: An Introductory Analysis: “I started to read it and simply could not stop. By the end of the book I knew that it was economics that interested me most.”

Asked why he chose to focus on international trade, Helpman explains “it’s a field where you simultaneously study aspects of macroeconomics, microeconomics, public economy and labor policy. I’ve always been attracted to areas where you can bring new approaches to bear on fundamental issues.”

In the 1970s, he began to analyze trade flow patterns and reached two conclusions that refused to fit with the model taught during his student years: firstly, that world trade was mediated more by multinational corporations than homogeneous sectors; and, secondly, that most trade was happening between countries of a similar economic level, contrary to the then-prevailing theory of comparative advantage.

The jury goes on to say in its citation that “his research has highlighted the role of market structure as well as multinational firms.” And adds that “Helpman’s research has transformed the theory of international trade by giving it a strong grounding in the theory of the firm and of monopolistic competition. In several papers, he laid the foundations for integrating the traditional theory of comparative advantage with the behavior of transnational firms and foreign direct investment. This work helped to initiate a large literature on the location of production of final and intermediate goods across countries.”

Helpman considers that much still needs doing on the question of multinational firms and their influence on world trade: “We can imagine models that multinationals work with and we know they are influential in economic policy formation, but there’s not enough research coming up with hard evidence.”

Where we can point to solid advance is in the analysis of non-cost determinants of production location: “To choose a location firms have to decide what production they want in a given market and the proportion they are looking for between export and domestic sales, but they also have to consider the country’s legal system and the certainty of contracts. Multinationals tend to work with numerous suppliers and they have to be sure that they will all abide by their contracts. Another big factor is taxes, which vary a lot from one country to the next.”

Theoretical and empirical economics

Helpman is a theoretical economist for whom “a model is good if it is able to address some interesting questions and provide non-trivial answers.” But he is also keenly aware of the value of empirical work, citing for example “descriptive work that offers revealing data on what is happening in a country,” and carries this conviction into his own writing: “As much as I like to know facts and understand real-world phenomena, I feel that my comparative advantage is in applied theory. For these reasons, I much prefer to have a co-author who is well versed in empirical methods.”

In the case of international trade theory, he is co-author with Paul Krugman of the 1985 book Market Structure and Foreign Trade. The two men, however, differed in their approach, with Helpman more interested in exploring the links between trade, foreign direct investment, economic growth and political economy. This interest would lead him to develop a new theory of economic growth with colleague Gene Grossman, whose fruit was their 1991 publication Innovation and Growth in the Global Economy.

In the words of the jury: “Helpman’s model of quality ladders contributes to the literature analyzing how cumulative innovation promotes economic growth.” This is among the issues explored in his 2004 book The Mystery of Economic Growth, where he reviews in detail the factors and processes that have helped rich countries grow and left poor countries struggling. In particular, he points to institutions – including property rights protection, legal systems, customs, and political systems – as the key to the mystery of economic growth. A mystery whose solution could lead to policies capable of setting the poorest countries on the path of sustained growth.

“Another set of contributions,” the citation continues, “analyzes the competition for protection among political interest groups. His research on the politics of protection has suggested that an industry´s level of protection is related, among other things, to the level of its political organization, its exposure to foreign trade, and the responsiveness of domestic prices to variations in tariff protection.”

Helpman recalls that “when we talk about the politics of trade and its quotas, taxes, free-trade areas… there are a lot of players in the game. Also important is the interaction between domestic and international policy. Part of the research effort in the political economy of protection involves understanding how these forces combine and what results we can expect in policy terms. In analytical terms, the goal is to predict the level of protection each industry can afford.”

Economics, Finance and Management jury

The jury in this category was chaired by Kenneth J. Arrow, Nobel laureate in Economics and Professor of Economics and of Operations Research, Emeritus, at Stanford University (United States), with Manuel Arellano, Professor of Econometrics at the Center for Monetary and Financial Studies (CEMFI) (Spain), acting as secretary. Remaining members were Andreu Mas-Colell, Professor of Economics at Pompeu Fabra University (Spain); Albrecht Ritschl, Professor of Economic History at the London School of Economics (United Kingdom); and Jean Tirole, Chairman of the Board of the Fondation Jean-Jacques Laffont at Toulouse School of Economics (TSE)and Scientific Director of Toulouse University’s Institute for Industrial Economics (France).