Theories Of International Trade

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One of the main and historically early form of world economic relations is an international trade, which in the XX century became the base of the world market formation. International trade - is a form of international economic relations, which reflects the import and export of goods and services and is based on the international division of labor. Having arisen in ancient times, world trade reached a significant scale and assumed the character of stable international commodity-money relations in the XVIII-XIX centuries. A powerful impulse of this process was the creation in a number of industrially more developed countries (England, Holland, and others) the large-scale machine production, based on a regular import of raw materials from economically…show more content…
What products should this or that country sell? The basis of free trade - the removal of restrictions on the movement of goods and services from one country to another – was laid by the Classical economists (mostly British). The neoclassical theory of international trade developed in the framework of the classical theory of international trade. There are some basic fundamental theories: 1. The first theory of international trade was mercantilism (T.Men, A.Serra, A.Monkreten). The mercantilists believed that the wealth that nations had were fixed and, consequently, welfare of a country was possible only through the redeployment of existing wealth, at the cost of other countries. The mercantilists believed that for ensuring a constant inflow of gold into the country export should increase and import should be limited. Over time, the best practices of mercantilism began to enter into conflict with the needs of developing capitalism, which required the abolition of feudal restrictions and the transition to free trade. Further development of the theory of international trade received in the writings of the classical…show more content…
Hecksher-Ohlin theory, which appeared in the 30s of the twentieth century, belongs to the neo-classical concepts of international trade. The main provisions of their theories are summarized as follows: firstly, there is a tendency in the countries those goods export for which the factors of production are excess, and to import such goods for manufacturing of which are required the relatively rare factors; secondly, in the international trade there is a trend of leveling of the "factor prices"; and thirdly, the export of goods may be replaced by the movement of factors of production across national boundaries. The neoclassical concept of the Heckscher-Ohlin model is convenient to explain the reasons for the development of trade between developed and developing countries, where in exchange for raw materials, which are exported in developed countries, in developing countries machinery and equipment are imported. However, not all effects of international trade are stacked in the theory of Heckscher-Ohlin, because today the center of gravity of international trade is gradually shifting to the mutual trade of "similar" goods between "similar" countries (Zhang). International trade affects the macroeconomic equilibrium of the national economy. The indicators of world trade depend on such macroeconomic variables as national income, price level, employment, aggregate supply and demand, investment, consumption and
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