LITERATURE REVIEW ON THEORIES OF INTERNATIONAL TRADE AND POLICIES BEHIND MODERN WORLD TRADE (original) (raw)

Revisiting The International Trade Theories

isara solutions, 2021

This paper provides a comprehensive examination of diverse trade theories that have shaped international trade. The analysis spans traditional theories such as mercantilism, absolute advantage, and comparative advantage, highlighting their significant principles and criticism. Moving beyond classical paradigms, the paper delves into neoclassical theories, emphasizing the role of factor endowments, factor proportions, and the Heckscher-Ohlin model in explaining patterns of trade. The paper further explores modern trade theories, including the New Trade Theory and the Strategic Trade Policy. These perspectives elucidate the role of economies of scale, imperfect competition, and government intervention in shaping trade dynamics. Additionally, the paper discusses the rising relevance of global value chains and their impact on international trade patterns. Incorporating recent developments in economic thought, the analysis extends to theories addressing non-traditional aspects of trade, such as the New Economic Geography and the Gravity Model. These frameworks offer insights into the spatial distribution of economic activities and the gravitational forces influencing trade flows between nations.

Changing Paradigm in Trade Theories: A Review and Future Research Agenda

Indian Journal of Science and Technology, 2016

Objectives: The objectives of the study were to understand the evolution of trade theories and their application across nations over a period of time and to provide future direction of research for international trade. Methods/Statistical Analysis: To meet the objectives, the study undertook a comprehensive review of literature to bring together works of different researchers in the area of international trade. It summarizes the past theories and applications with the research advancements over the years. Findings: The study finds that over the years, research in international trade has evolved with new forms of models coming into existence. Many trade theories like absolute advantage, comparative advantage, factor endowment, factor price equalization, gravity model etc. have emerged and applied. At the same time, the trade environment across the developed and developing countries has metamorphosed with the advent of World Trade Organization and multiple trade blocs. Several factors have significantly gained importance, thus leading to a need of new dimensions in trade research. Conclusion/Improvements: The study proposes development of trade models which could incorporate pace of technological development and innovation, economic shocks like financial crisis, Brexit etc. and changes in global value chains. It also highlights the importance of future research in trade in services.

International Trade Theory and Policy: A Review of the Literature

SSRN Electronic Journal, 2000

This paper provides a survey of the literature on trade theory, from the classical example of comparative advantage to the New Trade theories currently used by many advanced countries to direct industrial policy and trade. An account is provided of the neo-classical brand of reciprocal demand and resource endowment theories, along with their usual empirical verifications and logical critiques. A useful supplement is provided in terms of Staffan Linder's theory of "overlapping demand," which provides an explanation of trade structure in terms of aggregate demand. Attention is drawn to new developments in trade theory, with strategic trade providing inputs to industrial policy. Issues relating to trade, growth, and development are dealt with separately, supplemented by an account of the neo-Marxist versions of trade and underdevelopment.

International Trade Theory: A Comparison Between Three Schools of Thought

Essex Student Journal, 2022

This paper critically compares three different theorisations of trade based on the factoral Heckscher-Ohlin-Samuelson model (Rogowski, 1987), the sectoral Ricardo-Viner model (Hiscox, 2001) and the firm-related New Trade Theory model (Baccini et al., 2017). Indeed, all three papers seek to explain why some interest groups favour trade openness while others prefer protectionism. Respectively, each article explained trade based on the differences in the factor-endowments between various social groups, the domestic factor mobility (which can increase the importance of industrial-sectoral disparities), or the international competitiveness level of individual firms. Although the theorisation backgrounds and the research designs differ between the analysed papers, this article argues that, in the end, these contributions are an integral part of a bigger vision that support researchers in assessing to what extent some interest groups influence policy-making processes in contemporary democracies. Finally, this review noted the significant contribution of the microeconomic New Trade Theory: winners from trade liberalisation are not diffuse as presumed by macro-level analyses but highly concentrated and limited.

A Survey of the Evolution of International Trade Theories

2020

The purpose of the paper is to give emphasis to the evolution of international trade theories and their application among nations. A review of the literature method was applied to review the evolution of different scholars’ contributions in the area of international trade. Over a period of time, the development in theories of international trade has gone significant changes. While classical and neo-classical trade theories remain valid new trade models have important insights to describe and seem to a better explanation of the present global trade patterns in the dynamic world.

DISSERTATION. International Trade And Its Impact On The Global Economy

International Trade and Its Impact on the Global Economy, 2019

Abstract With regard to the theories of growth, the flow of trade has a significance in determination of the rate of economic growth because trade allows the progress of technology in a region that ends up playing a crucial role in productions and gains of competition. This eventually fosters both the development and growth of a given economy. However, there are several arguments that claim that only trade cannot bring about economic growth and development and thus there are other factors like the political stability, the extent to which the rule of law is enforced, the population growth rate and the level of secondary and tertiary enrolment among other critical issues. The main goal of this Dissertation is to provide an extensive study of international trade and also ascertain the impact that it exerts on the global economy by narrowing down to regional, multilateral and bilateral trade agreements and their effects. The study also provides current data and information about the trends in international trade like the Brexit and the US-China trade war that are all affecting the economic growth of respective regions. Key words: International trade, economic growth, trade openness, global economy

A critique of modern theories of trade

MPRA Paper No 105194, 2021

This article recapitulates some of the trade theories reputed to be of the twentieth century. Here, the Heckscher-Ohlin theory (with some of its variants), endogenous growth theory, product cycle theory, and new trade theory were considered. This review thereof, amidst others, highlight some of the assumptions of these theories and thus present some critique of the same theories.

Theoretical concepts of trade policy development and analysis: Evolution and modern challenges in the context of the international trading system transformation

St Petersburg University Journal of Economic Studies, 2020

The study of the trade policy concepts within a framework of hyperglobalization and global regulation system transformation requires new theoretical and methodological approaches. On the one hand, trade policy design and implementation is closely linked to a wide range of issues from e-commerce to gender inequality. On the other hand, the newest trade theory focuses on studying the companies' export activities, their participation in global value chains and their trade costs. In addition, research methodology for various quantitative methods has grown significantly. An increasing number of papers deal with the analysis of specific trade policy instruments. However, despite the expanding number of studies on international trade and trade policy in the economic, political and legal fields, the interdisciplinary approach for a deeper understanding of the impact of specific measures on the countries socioeconomic development has not yet been developed. The paper presents an integrative review of studies in leading foreign and Russian journals on international trade, as well as a comparative analysis of the identified research areas.

International Trade with Classical and Contemporary Theories

Over its two hundred-year history, international trade theory witnessed increasing role of knowledge. Following classical theories of Smith (1776), and Ricardo (1817), based solely on labor as an element of cost, neoclassical contributions made it possible to take capital and other production factors into account through the concept of opportunity cost, undermining knowledge. Even the modern trade theories of Heckscher-Ohlin-Samuelson used two-factor models including just labor and capital. As of 1960s, parallel to the debate over Leontief Paradox, new theories of international trade began to cover knowledge and related concepts like skilled labor, technology gap, product cycle, etc. According to theories, how and who can trade with whom, we will try to explain this situation in this study.

The role of International Trade in the Global Economy & Its Effects On Economic Growth

2015

Recent decades have seen fast growth of the world economy. This growth has been driven in part by the even faster rise in international trade. The growth in trade is in turn the result of both technological developments and determined efforts to reduce trade barriers. Some developing countries have opened their own economies to take full improvement of the opportunities for economic development through trade, but many have not. outstanding trade barriers in industrial countries are determined in the agricultural products and manual manufactures in which developing countries have a proportional advantage. Further trade liberalization in these areas mainly, by both industrial and developing countries, would help the poorest get away from extreme poverty while also benefiting the industrial countries themselves .With the dawn of globalization, international business is becoming increasingly popular. Multinational organizations are among the most profitable in the world. A company needs...