Theories of International Trade





The present chapter explains the theoretical basis of international trade. The focus, in particular, is to:

  • Explain the various theories of international trade, ranging from the mercantilist version to classical theories of absolute and comparative cost advantage, the factor endowment theory, neo-factor proportions theory, country similarity theory, intra-industry trade, trade in intermediate products and services, and finally, Porter’s theory of national competitive advantage.
  • Discuss the static and dynamic gains from trade.
  • Explain terms of trade and their various forms.

Get International Business, 3rd Edition now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.