International Management
Apuntes
International Management L2 - International Trade theories Mercantilism and neo-mercantilism Theory of comparative advantage: The Ricardian model Objectives β’ Comprehend the historical and current rationale for interventionist trade theories β’ Explain how free trade improves global efficiency (Ricardian model) β’ Opportunity costs and comparative advantage β’ Production possibilities β’ Gains from trade (welfare and prices) β’ Wages, exchange rate and trade β’ Transportation costs and non-traded goods β’ Misconceptions about comparative advantage β’ Empirical evidence: β’ wages reflect productivity β’ trade patterns reflect relative productivity Intervention versus Laissez-Faire β’ Theories that support government intervention in the flow of trade β’ Mercantilism β’ Neomercantilism Mercantilism (1500-1800) countries should export more than they import β’ Maintain a favorable balance of trade (trade surplus) β’ Avoid an unfavorable balance of trade (trade deficit ) Neomercantilism run an export surplus to achieve social or political objectives Laissez-Faire versus Intervention Laissez-faire approach β’ Market forces should determine trade specialization β’ Specialization...
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