Friday, October 31, 2008

Traditional International Trade Theories



In international trade, there is no one theory that can alone describe the pattern. All traditional international trade theories along with contemporary ones work together to support the concept of globalization and allow you to look at international trade with a different view point.

Ricardian Model: This model is constructed such that only difference between countries is their production technologies. All other features are taken as identical. The Ricardian model states that the international trade will occur between countries and will be advantageous but the reason why countries trade is because of differences in production technology.

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