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Adam Smith Theory Of International Trade Essay

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2.1 Theoretical Literature
Definition of Export
According to Todaro 10th edition, Export is a function of international trade whereby goods produced in one country are shipped to another country for future sale or trade. The sale of such goods adds to the producing nation’s gross output. If used for trade, exports are exchanged for the other products or service.The term export means shipping the goods and service out of the port of the country.
Theory of international trade
Theoretically, the nation of trade is believed to have originated with mercantilist school of thought dating back to early 17th century. Proponents of the school opened that the only means that notion becomes more economically and politically power full and stronger is through the sale of export over imports.
Classical Theory
Classical theory of trade was first developed by Adam smith, in his famous “the wealth of Nations”, He refuses the mercantilist control over or faith of zero-sum game theory of international trade that one country can gain at the cost of the other. Classical economists have stressed the role of international trade for economic development.
Adam Smith Theory …show more content…

There by a country would be able to maximize its production (GNP) and its consumption or One big question that smith failed to answer was what if a country does not have absolute advantage? What would be the structure of the trade? David Ricardo addressed the answer for this question through comparative advantage (Ibid). He pointed out that countries should specialize in production where their greatest comparative advantage. Economic welfare (Salvatore,

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