CHAPTER 1

Theories of International Trade and Foreign Direct Investment

Cross-national business activities are best explained with the help of international economics, international finance, and global business literature. However, over the last couple of decades, there have been significant advances in international trade, foreign direct investment (FDI) theories exploring rampant globalization and cross-border investment activities. International trade theories generally concentrate on reasons for trade flow between at least two nations. They also refer to the nature and extent of gains or losses to an economy besides addressing the effects of trade policies on an economy. Most theories of international trade like classical, neo-classical and ...

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