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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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Categories:Business/Law
Published by: fallon_gelb on Mar 11, 2013
Copyright:Attribution Non-commercial

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03/11/2013

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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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