International Trade Theories International trade may be classified as the trade of capital, goods, and services across international boundaries or areas.
In this essay we will discuss about International Trade. After reading this essay you will learn about: Introduction to Theories of International Trade 2. Theory of Mercantilism of International Trade 3. Theory of Absolute Advantage 4. Theory of Comparative Advantage 5.
Factor Endowment Theory 6. Country Similarity Theory 7.
In this concept there are mainly two theories that are classical theory of trade and new trade theory each differentiates from each other with different advantages, assumption and drawbacks. Exchange of goods and services on an international level between two or more countries is stated as international trade. International business trade theories are basically different theories with their concept of trade how they explain international trade. The concept of majority of economist believe . We will write a custom essay sample on theories of international trade specifically for you. for only $/page. Order Now. We will write a custom essay sample on theories of international trade specifically for you. for only $ $/page. Order Now. Jennyfer from PhDessay. Hi, I am Jennyfer from PhD Essay.
New Trade Theory 8. Introduction to Theories of International Trade: The exchange of goods across national borders is termed as international trade. Countries differ widely in terms of the products and services traded. Countries rarely follow the trade structure of other nations; rather they evolve their own product portfolios and trade patterns for exports and imports.
Besides, nations have marked differences in their vulnerabilities to the upheavals in exogenous factors. Trade is crucial for the very survival of countries that have limited resources, such as Singapore or Hong Kong presently a province of Chinaor countries that have skewed resources, such as those located in the Caribbean and West Asian regions.
However, for countries with diversified resources, such as India, the US, China, and the UK, engagement in trade necessitates a logical basis. The trade patterns of a country are not a static phenomenon; rather these are dynamic in nature.
Moreover, the product profile and trade partners of a country do change over a period of time. Till recently, the Belgian city of Antwerp, the undisputed leader in diamond polishing and trade, had witnessed a shift of diamond business to India and other Asian countries, as given in Exhibit 2.
It is also imperative for international business managers to find answers to some basic issues, such as why do nations trade with each other? Is trading a zero-sum game or a mutually beneficial activity? Why do trade patterns among countries exhibit wide variations? Can government policies influence trade?
Trade theories also offer an insight, both descriptive and prescriptive, into the potential product portfolio and trade patterns. They also facilitate in understanding the basic reasons behind the evolution of a country as a supply base or market for specific products.
The principles of the regulatory frameworks of national governments and international organizations are also influenced to a varying extent by these basic economic theories.
Theory of Mercantilism of International Trade: The theory of mercantilism attributes and measures the wealth of a nation by the size of its accumulated treasures. Accumulated wealth is traditionally measured in terms of gold, as earlier gold and silver were considered the currency of international trade.Importance of International Trade Essay.
Discuss the importance of international trade to the company’s business () International trade is very important in this era for every international company, trade (export/import) in capital, .
7 theories of international trade: 1. Mercantilism 2. Absolute Advantage 3. Comparative Advantage 4. Heckscher-Ohlin Theory 5. Product Life-Cycle Theory 6.
New Trade Theory 7. The Theory of National Competitive Advantage. 1. Mercantilism-emerged in England in the midth century. International trade theory has shaped the economic policy of many nations for the past 50 years.
It was the driver behind the formation of the World Trade Organization and regional trade blocs such as the European Union and the North American Free Trade Agreement (NAFTA).
International Trade Theories Mercantilism Mercantilism was a sixteenth-century economic philosophy that maintained that a country's wealth was measured by its holdings of gold and silver (Mahoney, Trigg, Griffin, & Pustay, ). In this concept there are mainly two theories that are classical theory of trade and new trade theory each differentiates from each other with different advantages, assumption and drawbacks.
Exchange of goods and services on an international level between two or more countries is stated as international trade.
International trade theories are completely different type of theories that give explanation on international trade. In and centuries, mercantilism concerned that countries ought to at the same time encourage exports and discourage imports.