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Country-based theories, Modern or Firm-Based Trade Theories - Coggle…
Country-based theories
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absolute advantage: focused on the ability of a country to produce a good more efficiently than another nation. increased efficiencies, people in both countries would benefit and trade should be encouraged.
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Comparative advantage: country cannot produce a product more efficiently than the other country but can produce that product better and more efficiently than it does other goods.
focuses on the relative productivity differences, whereas absolute advantage looks at the absolute productivity
Heckscher-Ohlin Theory (Factor Proportions Theory): countries would produce and export goods that required resources or factors that were in great supply
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