Explore BrainMass

Explore BrainMass

    Global Trade: Principal Theories

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    What are three principal trade theories? How do these theories apply to the pattern of global trade? Are they still useful in our understanding of the dynamics of today?

    © BrainMass Inc. brainmass.com December 24, 2021, 7:19 pm ad1c9bdddf

    Solution Preview

    Dear Student,

    The three principal trade theories are
    1. Theory of absolute advantage
    2. Theory of comparative advantage
    3. Classical trade theory

    According to theory of absolute advantage, a country has an absolute advantage over the others if it is able to produce more of a product or service with the same amount of resources or the same amount of a good or service with fewer resources. This occurs because of the existence of better resources for producing a particular product or service.

    According ...

    Solution Summary

    The solution lists the three principal trade theories followed by a paragraph of explanation of each. Conclusions are reached in evaluating each theory.