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LearningObjectives
➢Understandwhynationstradewitheachother—benefits
oftrade.
➢Understandthetheorieiningtradeflowsbetween
nations.
➢Understandthetheoriesofinternationalisationofthefirm.
➢Befamiliarwiththeargumentsofthosewhomaintainthat
ernmentcanyaproactiveroleinpromoting
nationalcompetitiveadvantageertainindustries.
➢Examheimportantimplicationsthatinternational
tradeandinternationalisationtheoryholdsforbusiness
practice.
WhyIsTradeBeneficial?
➢trade-asituationwherea
ernmentdoesnotattemptto
influencethroughquotasorduties
whatitscitizenscanbuyfrom
anothercountryorwhattheycan
produceandselltoanother
country
➢Tradetheoryshowswhyitis
beneficialforacountrytoengage
ininternationaltradeevenfor
productsitisabletoproducefor
itself
WhyIsTradeBeneficial?
➢Internationaltrade
allowsacountry
➢tospecializeinthe
manufactureandexport
ofproductsand
servicesthatitcan
produceefficiently
➢importproductsandservicesthatcanbe
producedmoreefficientlyinothercountries
➢limitsonimportsmaybebeneficialto
producers,butnotbeneficialforconsumers
➢Overviewofwhywetrade(TheEconomist)
Overviewoftradetheory
➢Howhasinternationaltradetheoryevolved?
thth
➢Mercantilism(16and17centuries)promotedthe
ideaofencouragingexportsanddiscouragingimports
➢in1776,AdamSmithpromotedtheideaofunrestricted
trade
th
➢inthe19century,DavidRicardobuiltonSmithideas,
andinthe20thcentury,EliHeckscherandBer
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