International Economics, Second Edition

CHAPTER 3

Theories of International Trade

Introduction

In the centuries following the voyages of Columbus and da Gama, European economic growth was concentrated within nations sitting just off the North Atlantic Ocean—namely, Portugal, Spain, the Netherlands, France, and Britain. This was no coincidence, as long-distance trade was vital to the prosperity of these states. The opening of Atlantic trade routes transferred economic power from the Mediterranean to Western Europe, and merchant classes became more influential. The development of advanced financial systems in the Netherlands and Britain sustained the commercial growth and relative dominance of the Dutch and British. The great powers could fund expeditions for raw materials, and domestic ...