international trade theory

Table of Contents
I. Table Of Contents ……………………………………………………………….1
II. Abstract…………………………………………………………………………..2
III. Introduction (Overview of Trade Theory)…………………………………….....3
a. The Benefit of Trade …………………………………………………........4
b. The Pattern of International Trade………………………………………....5
IV. Mercantilism…………………………………………………………………….....6
V. Absolute Advantage……………………………………………………………......8
VI. Comparative Advantage………………………………………………………........8
a. Qualification and Assumption
VII. Hecksher-Ohlin Theory…………………………………………………………..11
a. The Leontief Paradox……………………………………………………..11
VIII. Country Similarity Theory
IX. The Product Life- Cycle Theory
X. Global Statistic Rival Theory
XI. Porter’s Theory of national Competitive Advantage
a. Porter’s Diamond
b. Evaluating Porter’s Theory
XII. Today’s Dominate International Trade Theory (Conclusion)……………………………..

Abstract In this reading a number of international trade theories are explained to help the reader better understand why it is beneficial for a country to engage in international trade, and explains the patterns of international trade that is observed in the world economy. It is understood how the theories of Smith, Ricardo, and Heckscher-Ohlin all make strong cases for unrestricted free trade. In contrast, the mercantilist doctrine and, to a lesser extent, the new trade theory can be interpreted to support government intervention to promote exports through subsidies and to limit imports through tariffs and quotas. In explain the pattern of international trade, the exception of mercantilism, which is silent on this issue, the different theories offer largely complementary explanation. Although no one theory may explain the apparent pattern of international trade, taken together, the theory of comparative advantage, the Heckscher-Ohlin theory, the product life-cycle theory, the new trade theory, and Porter’s theory of national competitive advantage do suggest which factors are