Evolution of Trade Theories over the Years
Assignment I
GOUTAM MUKHERJEE
2008HZ58026
Ist Semester
International Business
Evolution of Trade Theories over the years
Trade among counties is happening for ages. At the very basics, trade is about buying and selling – something human beings have been doing since they started living in societies. However, the same used to happen without any rules and regulations and completely depending on the individual or a group of traders. Over period of time countries have realized the need of cross country trading in a structured manner which can bring benefits to the economy and socio-political development. The countries may have strengths in one area based on their populations, or by strategically placed location or by natural resources it has. The countries need to focus on that what they can do best and import what they can get cheaper compared to production in own country. This new era that is unfolding amidst us is characterized by ideas and innovation. It took thousands of years for human society to progress from an agricultural economy to an industrial economy. Here are the trade theories which discussed on self sufficiency and free trade policies.
Mercantilist policy tries to make a country self sufficient.
Interventionist Mercantilism: According to this theory a country’s wealth is measured by its holdings of treasure, which usually meant its gold. This means a country should export more than imports, if successful, receive gold from countries that run deficits. To export more than they imported, governments imposed restrictions on most imports, and they subsidized production of many products that could otherwise not compete in domestic or export markets. Some countries used their colonial possessions to support this trade objective. The colonies had to export less highly valued raw materials and import more highly valued manufactured products. Mercantilist theory was intended to benefit the colonial
GOUTAM MUKHERJEE
2008HZ58026
Ist Semester
International Business
Evolution of Trade Theories over the years
Trade among counties is happening for ages. At the very basics, trade is about buying and selling – something human beings have been doing since they started living in societies. However, the same used to happen without any rules and regulations and completely depending on the individual or a group of traders. Over period of time countries have realized the need of cross country trading in a structured manner which can bring benefits to the economy and socio-political development. The countries may have strengths in one area based on their populations, or by strategically placed location or by natural resources it has. The countries need to focus on that what they can do best and import what they can get cheaper compared to production in own country. This new era that is unfolding amidst us is characterized by ideas and innovation. It took thousands of years for human society to progress from an agricultural economy to an industrial economy. Here are the trade theories which discussed on self sufficiency and free trade policies.
Mercantilist policy tries to make a country self sufficient.
Interventionist Mercantilism: According to this theory a country’s wealth is measured by its holdings of treasure, which usually meant its gold. This means a country should export more than imports, if successful, receive gold from countries that run deficits. To export more than they imported, governments imposed restrictions on most imports, and they subsidized production of many products that could otherwise not compete in domestic or export markets. Some countries used their colonial possessions to support this trade objective. The colonies had to export less highly valued raw materials and import more highly valued manufactured products. Mercantilist theory was intended to benefit the colonial