However, even if this view is attractive, it has weakness in the control of intervention. Some countries intervention will be biased (Krugman, 1987).
There is another trade view based on the idea that countries may support activities that generate external economies. This view mostly happens within companies that has limited innovation. As result, these companies will try to get and copy other companies knowledge and technology. Since the cost of knowledge is a fixed-cost, it will decline as more is produced and these economies of scale will generate imperfect competition. External economies view is similar to the argument of strategic trade policy. Both views give countries a reason to focus on some sectors and industries. However, external economies view insists that promoting sectors which result in external economies does not need to harm other countries (Krugman, 1987). .
Due to the conclusion that much trade result in increase in return and that the most of the international markets are imperfectly comparative, the economists of the new trade theory has got a fast acceptance which can be noticed by the greater degree of intervention from governments. In other hand, there is a strong criticism to the new interventionism. This criticism includes three points. First, since there are empirical difficulties, countries cannot decide the useful interventions. There always be a lack of some information that helps countries to decide the useful level of intervention. Second, economists raised the argument that gains from intervention will be consumed by entry of additional competitors. Moreover, even if a government subsidy has succeeded to prevent the competition of others it will be passed on to foreign consumers instead of securing excess returns for domestic firms. Third, economist argued that the empirical difficulty of applying trade policies increased significantly by the considerations of general equilibrium.
