International Trade Theory Overview

These flashcards cover key concepts and terms related to international trade theory, including motivations, various trade theories, and implications for management practice.

What motivates nations to trade with each other?

Nations trade to realize gains from trade

What is the primary argument for unrestricted free trade according to many economists?

Unrestricted free trade will raise the economic welfare of participating countries

What was Adam Smith's contribution to trade theory?

He promoted unrestricted free trade

What does Paul Krugman's new trade theory emphasize?

The world market can only support a limited number of firms in some industries, leading to trade skewed towards first mover advantages

What is the Heckscher-Ohlin theory?

Comparative advantage reflects differences in national factor endowments, such as land, labor, and capital

How does the Product Life-Cycle Theory describe trade?

Trade patterns change as products mature, impacting their production location