INTERNATIONAL TRADE THEORIES

The basic theories of international trade are:

THE MERCANTILIST supports the importance of exports and lowering imports,also receive-currency payment is based on gold standard and hence the problem with this theory is that it excludes the import good.
ABSOLUTE ADVANTAGE Based on what they produce has more advantages in its production and marketing whose theory is attributed to Adam Smith.
COMPARATIVE ADVANTAGE Based on commercial gain through specialization in the production of the good that has an absolute advantage,which was put forward by David Ricardo.

FACTOR ENDOWMENTS :This theory states that it should export products that are used intensively and having numerous factors that must import the products in use are scarce. The theory was espoused by Heckscher and Ohlin.

Also exposed the product life cycle where explain four stages that are the introduction,growth,maturity and the decline; At present show that The big challenges of the International Product Life Cycle these days are  dealing with a very short Introduction Stage, due to technological competitiveness and
extending the length of the PLC through Market Modification and Product Modification.

 

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