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    What are some of the traditional international trade theories that support the concept of globalization?

    List the major divers of globalization and give three examples of each.

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    International trade is the exchange of goods and services across international boundaries or territories. In most countries, it represents a significant share of GDP. While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact. Increasing international trade is the usually primary meaning of "globalization".

    Ricardian model
    The Ricardian model focuses on comparative advantage and is perhaps the most important concept in international trade theory. In a Ricardian model, countries specialize in producing what they produce best. Unlike other models, the Ricardian framework predicts that countries will fully specialize instead of producing a broad array of goods. Also, the Ricardian model does not directly consider factor endowments, such as the relative amounts of labor and capital within a country.

    Heckscher-Ohlin model
    The Heckscher-Ohlin model was produced as an alternative to the Ricardian model of basic comparative advantage. Despite its more complex and accurate predictive power, it also had an ideological mission: the elimination of the labor theory of value and the incorporation of the neoclassical price mechanism into international trade theory. The theory argues that the ...

    Solution Summary

    Some of the traditional international trade theories that support the concept of globalization are described. The major divers of globalization are listed and three examples of each of them are given.