- "International trade theory is a sub-field of economics which analyzes the patterns of international trade, its origins, and its welfare implications."
Study of various theories and models that explain the functions of international trade, its growth, and its effects on the economy.
Absolute advantage: The ability of a country or a firm to produce a particular good or service at a lower cost than its competitors.
Comparative advantage: The ability of a country to produce a good or service with a lower opportunity cost than its trading partner.
Terms of trade: The ratio of export prices to import prices, determines the purchasing power of a country's exports.
International competitiveness: The ability of a country to compete in international markets.
International trade patterns: The pattern of trade flows between countries.
Trade agreements: Agreements between countries that reduce barriers to trade.
Tariffs: Taxes imposed on imported goods.
Quotas: Quantity restrictions on imported goods.
Non-tariff barriers: Trade barriers that are not in the form of tariffs, such as regulations, standards, and licensing requirements.
Dumping: Selling goods in a foreign market at a lower price than the cost of production.
Trade flows: Trade flows represent the movement of goods and services between countries.
Trade balance: The difference between a country's imports and exports.
Balance of payments: A record of all the transactions between a country and the rest of the world.
Exchange rates: The prices of one currency in terms of another.
International capital flows: The movement of capital between countries.
Foreign direct investment: Investment in foreign countries by firms.
Portfolio investment: The purchase of stocks and bonds in foreign countries.
International financial markets: The markets where currencies, stocks, and bonds are bought and sold.
International institutions: The organizations that facilitate international trade, such as the World Trade Organization and the International Monetary Fund.
International economic development: The relationship between international trade and economic development.
Mercantilism: This theory emerged during the 16th century and believed that a country's wealth was determined by its gold and silver reserves. It promoted protectionism and imports were discouraged while exports were encouraged.
Absolute Advantage Theory: Introduced by Adam Smith, this theory states that a country should specialize in producing goods that it can produce more efficiently than other countries. This leads to increased efficiency and lower prices in international trade.
Comparative Advantage Theory: Introduced by David Ricardo, this theory states that a country should specialize in producing goods that it can produce at a lower opportunity cost than other countries. This leads to mutual gains from trade.
Factor Endowment Theory: This theory suggests that countries specialize in industries and products that use their abundant factors of production. For example, a country rich in natural resources would specialize in natural resource-based industries.
Product Life Cycle Theory: Developed by Raymond Vernon, this theory suggests that the production and sale of a product goes through different stages, with different countries specializing in different stages. For example, a new product may be produced in a high-income country, then mass-produced in a low-income country.
Strategic Trade Theory: This theory suggests that a country can create a competitive advantage by supporting domestic firms in strategic industries. This can be achieved through government subsidies or protectionist policies.
Gravity Model: This model predicts trade between two countries based on their size (in terms of GDP), distance, and other factors such as cultural links.
New Trade Theory: This theory emphasizes the role of economies of scale, imperfect competition, and product differentiation in international trade. It suggests that countries can gain a competitive advantage by specializing in particular industries, even if they do not have an absolute advantage or comparative advantage in those industries.
Porter's Diamond Model: This model emphasizes the role of factors such as factor endowments, firm strategy and structure, demand conditions, and related and supporting industries in competitive advantage. It suggests that countries with favorable conditions in these areas can gain a competitive advantage in particular industries.
Global Value Chains: This theory emphasizes the role of production networks and supply chains in international trade. It suggests that countries can participate in global value chains by specializing in particular tasks or stages of production, even if they do not produce a final product themselves.
- "International trade policy has been highly controversial since the 18th century."
- "International trade theory and economics itself have developed as means to evaluate the effects of trade policies."
- "International trade theory analyzes the patterns of international trade, its origins, and its welfare implications."
- "International trade policy has been highly controversial since the 18th century."
- No specific quote provided in the paragraph.
- "International trade theory and economics itself have developed as means to evaluate the effects of trade policies."
- "International trade theory and economics itself have developed as means to evaluate the effects of trade policies."
- "International trade theory analyzes... its welfare implications."
- "International trade theory... analyzes... its origins."
- No specific quote provided in the paragraph.
- "International trade theory and economics itself have developed as means to evaluate the effects of trade policies."
- No specific quote provided in the paragraph.
- "International trade theory and economics itself have developed as means to evaluate the effects of trade policies."
- "International trade policy has been highly controversial since the 18th century."
- "International trade theory analyzes the patterns of international trade..."
- "International trade theory... analyzes... its welfare implications."
- No specific quote provided in the paragraph.
- No specific quote provided in the paragraph.
- No specific quote provided in the paragraph.