International Trade (Part 2)

After all said and done, the mercantilism was of the opinion that the export of goods and services to other nations are more favourable and that the importation of goods and services without corresponding export is unfavourable. In view of this, it is to conclude that mercantilist writers encourages international trade and international relationship. The need of international trade emerged as a result of, industrialization, advance in technology, transportation, globalization and multi-national corporation which gave rise to economic interaction between different nations in exchange of goods and services. (That is, nations cannot exist without international trade) 


Above all, the history of international trade cannot be complete with emphases of Adam Smith and David Recardo the founder of the Law of Comparative Advantage. According to Adam Smith, International Trade emerge as trade taking place on the bases of country exercise absolute advantage over one another. On the other way, the David Ricardo emphasis on the law of comparative advantage which was the basis for the need for international trade which came up as a result of difference in technology or natural resources. The emergence of international trade is as a result of comparative advantage which was the basis for the need of  international trade. The emergence of International Trade as a result of comparative advantage was considered on the following bases; 



  1. Labour is the only primary input to production.

  2. The relative ratio of labour at which the production of one good can be traded off for another differs between countries and governments. 


In the earlier 90s a theory of international trade was developed by swich economist, Eli Hecksherand Bertil Ohlion.


 

COMMENT

22

Ajala Junior
21 Mar

Yes, I agree with the fact that labour is the primary input to production. This is because, without efficient manpower, there won't be a high productivity level

0 REPLY

19

Ademujimi Ifedayo
21 Mar

Thinking like an economist... I can relate with this. 

0 REPLY

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