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P. 1
Trade Theory Ch. 5

Trade Theory Ch. 5

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Published by fallon_gelb
international trade theory ppt
international trade theory ppt

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Published by: fallon_gelb on Mar 11, 2013
Copyright:Attribution Non-commercial


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International Trade Theory
International Trade Theory
What is international trade?
Exchange of raw materials and manufacturedgoods (and services) across national borders
Classical trade theories:
explain national economy conditions--countryadvantages--that enable such exchange to happen
New trade theories:
explain links among natural country advantages,government action, and industry characteristicsthat enable such exchange to happen
Implications for International Business
Classical Trade Theories
Mercantilism (pre-16th century)
Takes an us-versus-them view of trade
Other country’s gain is our country’s loss
Free Trade theories
Absolute Advantage (Adam Smith, 1776)
Comparative Advantage (David Ricardo, 1817)
Specialization of production and free flow of goods
benefit all trading partners’ economies
Free Trade refined
Factor-proportions (Heckscher-Ohlin, 1919)
International product life cycle (Ray Vernon, 1966)

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