7

International Trade Theories and Applications

LEARNING OBJECTIVES

After going through this chapter, you should be able to:

  • Explain international trade and the classical trade theories

  • Compare and contrast the theory of absolute advantage and comparative advantage

  • Relate the importance of the product life-cycle theory with the study of international economics

  • Review recent trends in world trade

Exporting Ethiopian Roses

Ethiopia adopted a structural adjustment programme in 1991 with a change of government and launched extensive reforms to transform its command economy to a market-oriented economy. In the mid-1990s, the Ethiopian government announced its development vision, known as agricultural development–led industrialization policy ...

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