Paul Krugman, a prominent US economist who writes columns for the New York Times, has won the 2008 Nobel Prize for economics for his work on trade theory.

According to the Royal Swedish Academy of Sciences, which selects the winners, Krugman, the 55-year-old professor of economics and international affairs at Princeton University in the United States, received the prestigious $1.4 million award “for his analysis of trade patterns and location of economic activity.”

The Princeton economist’s theories help explain why world trade is dominated by countries that both import and export similar products. Highlighting the significance of Krugman’s work, the Academy said in a statement: “This kind of trade enables specialization and large-scale production, which result in lower prices and a greater diversity of commodities.”

Krugman, who gained his reputation in economics by contributing to strategic trade theory, said in a telephone interview that the Nobel Prize came as “a total surprise.”

A self-proclaimed liberal, Krugman is a strong critic of the Bush administration. He has regularly taken Bush to task in his columns for the New York Times, slamming the President for everything from the war in Iraq to his big tax cuts.

In one of his columns last year, Krugman wrote: “Mr. Bush has degraded our government and undermined the rule of law. He has led us into strategic disaster and moral squalor.”

Recently, in an interview with Bloomberg Television, Krugman said the current financial turmoil had similarities with the Great Depression. He said: “The parallels are stronger than I thought they would be. We developed a financial system that is out of control. The only things people want to buy are T-bills and water.”

Krugman, the Nobel laureate opines that there is little danger of a move toward protectionism in the US, no matter which party wins in the general elections next month.