国际商务教材5.pptVIP

INTERNATIONAL BUSINESS Ch. 5 International Trade Theory Overview of Trade Theory Free Trade occurs when a government does not attempt to influence, through quotas or duties, what its citizens can buy from another country or what they can produce and sell to another country (invisible hand of market mechanism and laissez-faire) The Benefits of Trade allow a country to specialize in the manufacture and export of products that can be produced most efficiently in that country The Pattern of International Trade displays patterns that are easy to understand (Climate and natural resource endowments – Brazil/coffee; Saudi Arabia/oil; China/crawfish). Others are not so easy to understand (Japan and cars) Mercantilism defines the role of government in promoting exports and limiting imports Smith, Ricardo and Hecksher-Ohlin defines that import control and export incentives are self-defeating and result in wasted resources New trade theory and Porter’s theory appear to make a case for limited involvement Mercantilism: Mid-16th Century Mercantilism:1st theory of international trade emerged in England A nation’s wealth depends on accumulated treasure (gold and silver) Gold and silver are the currency of trade Import causes gold losing and export leads to gold earning Theory says you should have a trade surplus Maximize export through subsidies Minimize imports through tariffs and quotas In 1752, David Hume pointed out that: Increased exports lead to inflation and higher prices Increased imports lead to lower prices Flaw: “zero-sum game” – a gain by one country results in a loss by another Result: Country A sells less because of high prices and Country B sells more because of lower prices In the long run, no one can keep a trade surplus Theory of Absolute Advantage Adam Smith argued with Mercantilism in (Wealth of Nations, 1776): Capability of one country to produce more of a product with the same amount of input than another country can vary A country should produce on