Questions On International Trade Theory - 1332 Words

Student name: Fangyu Zhou Student number: 201109990 Module name: International business Module code: MKIB 225 Essay question: Why do businesses internationalize? Compare and contrast the various â€Å"standard† theories . Word count: 1051 Why does business internationalize? With the development of international business, countries with the purpose of increasing the variety of local products had been trying best for decades to trade with other nations. Furthermore, international trade theories were developed to explain the benefit nations can get from utilizing free trade pattern and participating in the multilateral trade with opening up strategy by eliminating import control, export support and other types of†¦show more content†¦As a result, every country in the world, including the weakness country, it can benefit from international trade by comparative advantage (Neary, 2012). For example, even both the productivity of corn and rice in Ghana is lower than South Korea, but Ghana still can gain the rice from trade by exporting which is comparatively more efficient in production than the corn from South Korea, while importing corn with relatively lower productivity. According to Redding and Vera-Martin (2002) provided, different from technology-based comparative advantage, Heckscher-Ohlin supported that comparative advantage arises from the difference in endowed resources such as land, labor, and capital, rather than the difference in productivity. For example, Saudi Arabia has long been a substantial exporter of oil, but it is an importer of fruits, reflecting its relative local abundance of oil field while the local scarcity of land on planting fruit. Moreover, factor endowment theory has been subjected to numerous tests, but the thing which is some situations cannot be accounted. Such as the United State who is abundant in capital imports more capital-intensive goods than its export of that (Redding, Vera-Martin, 2002). The Leontief Paradox exists mostly because that Heckscher-Ohlin developed the theory under the assumption that technologies are the same over the world. However, the validity of the factor endowment theory is not affected,Show MoreRelatedInternational Trade : Comparative And Competitive Advantage1512 Words   |  7 Pages International trade theories are simply theories that explain how imports and exports work between different countries. Hence the name international trade. In this paper I will be reviewing different theories of international trade, explain the difference between comparative and competitive advantages, and answering three important questions. What the underlying economic rationale for internat ional business activity is, why trade takes place, and the gains from trade and investment. I will firstRead MoreInternational Trade Theories That Can Be Analyzed944 Words   |  4 PagesInternational Trade Theories There are a number of different trade theories that can be analyzed in regards to the above referenced research project, and I will attempt to address the theories I feel that are most relatable to the question in hand. The first international trade theory I will address is that of Mercantilism. Historically, mercantilism is defined as â€Å"the economic theory that trade generates wealth and is stimulated by the accumulation of profitable balances, which a government shouldRead MoreDavid Ricardos The Principle Of Political Economy And Taxation1519 Words   |  7 PagesDavid Ricardo who developed the concept of the comparative advantage of trade. This concept is a part of the classical theory of trade and was published in 1817 in David Ricardo’s book entitled the Principles of Political Economy and Taxation (Appleyard Field, 2014, p. 30). This paper will address the effectiveness of this concept as it has been applied to real-world international trade after the General Agreement in Trade and Tariffs (GATT) was signed in 1947. How the level of wages, productivityRead More Challenging Comparative Advantage Essay1410 Words   |  6 Pagesexplain the benefits of mutual trade (Carbaugh, 2008). Many underlying assumptions of comparative advantage depend on states of economic equilibrium and an absence of economy of scale. In reality, economies are dynamic and subject to innovation and interference; which has led to revised assumptions of return and competition (Krugman, 1987). These factors have created questions of free trade and governmental participation in an economy by the development of strategic trade policies. These new conceptsRead MoreInternational Trade : Economic Activity Of Nations1627 Words   |  7 PagesInternational trade is important to the overall economic activity of nations, including the growth and domestics’ production. According to the United Nations Conference on Trade and Development (UNCTAD) and WTO, international trade has grown remarkably in recent decades as shown in figure 1 and 2. It can be seen that the growth of trade has led into the rapid economic growth in some countries. The reasons of rapid growth in world trade is due to the reduction of trade barriers at global and regionalRead MoreDiscussion Questions1621 Words   |  7 PagesCRITICAL QUESTIONS AND DISCUSSION Note: Questions from the end of the chapters can also be used for discussion questions Chapter 2: Foundations of Modern Trade Theory: Comparative Advantage Critical Thinking and Discussion Questions: QUESTION 1: Mercantilism is a bankrupt theory that has no place in the modern world. Discuss. QUESTION 2: Is free trade fair? Discuss. QUESTION 3: Unions in developed nations often oppose imports from low-wage countries and advocate trade barriers toRead MoreThe Pros And Cons Of Free Trade1286 Words   |  6 Pageswhich is a free trade agreement between the US and 11 other Pacific Rim states reached under the Obama administration. Trump stated that he did a great thing for the American worker. (Bradner) When Trump was on the presidential campaign trail, 54% of Americans answered â€Å"much more likely† or â€Å"somewhat more likely† to the question would you be more likely or less likely to vote for a candidate for President who promises to put a stop to the Trans-Pacific Partnership, and enact trade policies thatRead MoreCritical Thinking And Case Studies1151 Words   |  5 PagesIndividual Assignment 3 In this assignment I am discussing some case study questions from chapter 7 and critical thinking discussion questions for chapters 8 and 9 of the Global Business Today text. These questions are for the individual week 3 assignment of our MBA 539 International Business class. These discussion questions are composed to increase the reader’s understanding of â€Å"the political economy of international trade†, â€Å"foreign direct investment† and â€Å"regional economic integration† as explainedRead MoreInternational Trade And Gender Wage Inequality1426 Words   |  6 PagesInternational Trade and Gender Wage Inequality Motivation for the Research: In recent years, globalization and international trade has become a significant issue for countries. Consumers tend to use more goods and services and due to the lack of resources, the need to trade with other countries seems to be inevitable. Assuming that globalization would occur, labor factors become noteworthy. Although growth in international trade provide more job opportunities for people, there are still inequalityRead MoreInternational Trade and The Global Economy1018 Words   |  5 PagesFree Trade International trade links countries to the global economy (Vollrath, 1991). The global economy needs free trade. Countries need free trade. Trade with other countries occurs at some level in every country globally. There may be some indigenous tribes within some countries that can lay the claim that they are self-sufficient, however, there is not a single country that can say the same. Proponents of an open trading system contend that international trade results in higher levels of