International Trades Theories Essay

2608 WordsMar 25, 201211 Pages
International trade is the exchange of goods, services and capital across international borders or territories. International trade in most cases represent a country gross domestic product(GDP). international trade has a direct or an indirect importance on the economies of a nation. such trade could be between individuals, firms, or residence of two countries. countries engage in international trade because export spark additional economic activities in the domestic market, such as jobs creation and income provision. Import on the other hand can pressure domestic supplier to cut their prices and improve their quality. Failure to respond to foreign competition may leads to companies shut-down, and unemployed workers. The important of international trade is such that consumers, business, workers and scholars have attempted to develop theories and design policies they hope will benefit their countries. International trade theories deal with the different models of international trades that have been developed to explain the diverse idea behind the exchange of goods and services across international borders or global territories. International trade theories provides explanations for the pattern of international trades and the distribution of gains from it. Most economist are convinced of the benefits of liberal trades theories, but many non-economist oppose liberal trades. This essay attempt to explain why trade theories is convincing to economist, and also deal with why many non-economists are not persuaded . Other important issues to be discuss are; the various trades theories , the factor proportions (Heckscher-Ohlin model), the Leontief paradox, product life cycle theory (Raymond Vernon's model), Demand-side / intra-trade theories of trade (Linder model), Economies of scale, technology-gap trade ( Michael Posner model), porter's diamond theory and lastly pattern

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