INTERNATIONAL TRADE


INTRODUCTION


TRADE THEORIES

Trade theories may be broadly classified into two types: (1) theories that deal with the natural order of trade (i.e. they examine and explain trade that would exist in the absence of governmental interference) and (2) theories that prescribe governmental interference, to varying degrees, with free movement of goods and services among countries.

Category 1

Absolute advantage

Comparative advantage

Country size

Factor-Proportions theory

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Figure 1. RCC Structure                          Figure 2. Steel Structure

Product Life Cycle

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Figure 3. The Product Life Cycle

Country-Similarity Theory

Category 2


WHY COMPANIES TRADE?


TRADE IMPEDIMENTS


GOVERNMENTAL INTERVENTION ON TRADE

Reasons:


FORMS OF TRADE CONTROL


References:

Baldwin, R. E. (1971). Determinants of the commodity structure of U. S. trade. American Economic Review, 61, pp. 126-146.

Baldwin, R. E. (1979).Determinants of foreign trade and investment: Further evidence. Review of Economics and Statistics, 61, pp. 40-48


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