International Trade Theories Term Paper by Nicky

A brief review of theories of international trade.
# 151202 | 891 words | 5 sources | APA | 2012 | US
Published on May 29, 2012 in Economics (International)

$19.95 Buy and instantly download this paper now


This paper explores various trade theories, including the mercantilist theory, the theory of absolute advantage, the theory of comparative advantage, the theory of country size, the factor proportions theory, the product life cycle theory and Porter's diamond theory. The paper shows how businesses must use international business frameworks to look inward at their trading advantages in deciding what to trade in an increasingly liberalized world that shuns mercantilism in general.

From the Paper:

"Trade liberalization allows businesses to exploit the above advantages. Without a doubt, this free trade has positively impacted both economic growth and physical capital investment. Data suggests that over the 1950-98 period, those countries that liberalized their trade regimes experienced average annual growth rates that were about 1.5 percentage points higher than before liberalization (Wacziarg and Welch, 2008). Further, post liberalization investment rates rose 1.5 to 2.0 percentage points and liberalization raised the average trade to GDP ratio by 5 percentage points, indicating that trade policy liberalization raised the level of openness of liberalizers (Wacziarg and Welch, 2008).
"Even though trade liberalization is beneficial, countries continue to control it for a variety of reasons and businesses must consider regulations in addition to their strengths when decided where to do business. Mercantilism as a philosophy may be dead, but special interests that lead to trade controls are alive and well (Mercantilism today: how a dead philosophy comes back to life, 2003). Trade controls that affect price and indirectly quantity include tariffs, subsidies, arbitrary customs-valuation and special fees (Daniels, Radebaugh, and Sullivan, 2007). Trade controls that directly affect quantity and indirectly affect price include quotas, voluntary export restrictions, "buy local" legislation, arbitrary standards, licensing arrangements, foreign-exchange controls, administrative delays and requirements to take goods in exchange for selling (Daniels, Radebaugh, and Sullivan, 2007)."

Sample of Sources Used:

  • Daniels, J. D., Radebaugh, L. H., & Sullivan, D. P. (2007) International business: Environments and operations. Upper Saddle River, NJ: Pearson/Prentice Hall. ISBN: 0131869426.
  • Kokko, A., Matha, T., and Gustavsson, P. (2006). Regional integration And trade diversion in Europe.
  • Mercantilism.
  • Mercantilism today: how a dead philosophy comes back to life (2003, September 19). National Review.
  • Wacziarg, R. and Welch, K.H. (2008). Trade liberalization and growth. The World Bank Economic Review, 22(2):187-231.

Cite this Term Paper:

APA Format

International Trade Theories (2012, May 29) Retrieved March 24, 2023, from

MLA Format

"International Trade Theories" 29 May 2012. Web. 24 March. 2023. <>