Traditional Trade Theory

  • Created by: Helen
  • Created on: 23-04-13 21:39
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  • Traditional Trade Theory
    • Trade theory shows why it is beneficial for a country to engage in international trade even for products it is able to produce itself
    • What is Free Trade?
      • Government does not attempt to influence through quotas or duties what a country can export or import
    • The benefits of trade
      • Efficiency
    • Patterns of International Trade
    • Trade Theory and Government policy
      • Mercantilism
      • Absolute Advantage (Smith, 1776)
      • Comparative Advantage (Ricardo,1817)
      • Heckscher (1919)- Olin (1933)
      • Leontief Paradox (1953)
    • Is Free Trade always beneficial?
      • immobile resources
      • diminishing returns
      • dynamic effects and economic growth
    • Could a rich country be worse off with Free Trade?


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