international trade
the purchase, sale, or exchange of goods and services across national borders.
mercantilism
the trade theory that nations should accumulate financial wealth, usually in the form of gold, encouraging exports and discouraging imports.
absolute advantage
The ability of a nation to produce goods or services more efficiently than any other nation.
comparative advantage
when a country is unable to produce a good more efficiently than other nations, but produce the good more efficiently than it does any other good.
Factor Proportions Theory
states that countries produce and export good that require resources (factors) are abundant and import good that require resources in short supply.
International Product Life Cycle Theory
states that a company will begin by exporting its products and later undertake foreign direct investment as the product moves through the cycle.
New Trade Theory
(1) there are gains to be made from specialization and increasing economies of scale. (2) the companies first to market can create barriers to entry. (3) government may play a role in assisting its home companies.
National Competitive Advantage Theory
states that a nation's competitiveness in an industry depends on the capacity of the industry to innovate and upgrade.