Theories of International Trade
Absolute Advantage (Adam Smith): A country should produce what it can do best.
Comparative Advantage (David Ricardo): Even if a country is better at everything, it should focus on what it does relatively better.
Heckscher-Ohlin Theory: Countries export goods that use their abundant resources (like labor or capital).
New Trade Theory: Large-scale production and market competition influence trade.
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"A deep dive into the dynamics of international trade, exploring how countries exchange goods and services, the economic theories behind trade, and the impact of policies, globalization, and market forces on global commerce."
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Comparative Advantage in International Trade
Certain countries have unique strengths, local resources and talent that can be a comparative advantage to them, and make products at a cheaper cost than other countries. If they indulge in protectionism, the end result is higher costs and inefficiency for all.
Example: China ...
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