BUSI 2701 Chapter Notes - Chapter 5: Ethnocentrism, Factors Of Production, New Trade Theory
9 Dec 2015
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The act or process of buying, selling, or exchanging. A situation where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. The absence of barriers to the free flow of goods and services between countries. Is free trade beneficial: international trade allows a country, to specialize in the manufacture and export of products that it can produce efficiently, import products that can be produced more efficiently in other countries. Trade theory shows why it is beneficial for a country to engage in international trade even for products it is able to produce for itself. 7 selected international trade theories: mercantilism(mid-16thcentury, adamsmith-absoluteadvantage(1776, davidricardo-comparativeadvantage(1817, eliheckscher-ohlintheory(1930s, the product life - cycle theory (mid 1960s, new trade theory (1970s, porter"sdiamond(1990, mercantilism. Proposed in 1776, smith"s theory was the first to explain why unrestricted free trade is beneficial to a country.
