Please enable JavaScript.
Coggle requires JavaScript to display documents.
International Trade Theories - Coggle Diagram
International Trade Theories
1500-1750
Mercantilism
Adam Smith
was the first person to organize formally most of the contributions of mercantilists in his book
The Wealth of Nations
.
Criticism
David Hume
The price-specie-flow mechanism
Adam Smith
David Ricardo
Mercantilist beliefs
Do they favor free trade?
NO.
.
Two stages
The early stage
Balance of bargains （
William Stafford
）
The late stage
Balance of trade （
Thomas Mun
）
challenge
1776
Classic trade theory
1.
Absolute advantage
2.
Comparative advantage
challenge
The collapse of feudal society, which is self-sufficient, and the rise of the merchant class
the late 1800s
The Heckscher-Ohlin theorem
The factor endowment theory
Assumption
2: There is no difference in terms of productivity of labor.
1:There are only 2 factors of production: labor and capital.
The factor proportions theory
The capital-labor ratio (K/L)
capital intensive
labor intensive
The capital price-labor price ratio (r/w)
capital abundant
labor abundant
the 1960s
New trade theory
Gravity theory
Problems of Government intervention
have poor information about which industry
inefficiency
challenge
Examples
Specialisation of IT in Silicon Valley – the US
Globalisation has led to increased variety for consumers.
