FALLSEM2015-16_CP0925_30-Jul-2015_RM01_Theory-of-Absulute-Camparative-Porter-Diamond-Product-life-cy - THEORIS OF INTERNATIONAL BUSINESS International

FALLSEM2015-16_CP0925_30-Jul-2015_RM01_Theory-of-Absulute-Camparative-Porter-Diamond-Product-life-cy

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THEORIS OF INTERNATIONAL BUSINESS International trade is the purchase, sale or exchange of goods and services across national border. International trade produces many benefits to countries both exporting and importing products. For countries importing products, the benefits are that they get goods or services they cannot produce enough of on their own. Likewise, for the exporter, one of the benefits is though the trade they can also get either the goods or services they need or the money in which to purchase these goods from another country or source. International trade also helps the economic of the countries. International trade encompasses many aspects in relation to various countries. There are many theories regarding international trade. Some of these include mercantilism, absolute advantage, comparative advantage, factor proportions theory, international product life cycle, new trade theory and national competitive advantage. DEFINITION OF MERCANTILISM Mercantilism is an economic theory and practice common in Europe from the 16th to the 18th century that promoted governmental regulation of a nation’s economy for the purpose of augmenting state power at the expense of rival national powers. In particular, it demands a positive balance of trade. It was the economic counterpart of political absolutism. The main goal was to increase a nation's wealth by imposing government regulation concerning all of the M e c a n s m A b s o l u t e A d v a n t a g e C o m p a r a t i v e A d v n t a g e H e c k s c h r O h l i n T h e o r y P r t e D a m o n T h o r y
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nation's commercial interests. It was believed that national strength could be maximized by limiting imports via tariffs and maximizing exports. Mercantilism was a cause of frequent European wars in that time and motivated colonial expansion. ORIGIN OF MERCANTALISM Most of the European economists who wrote between 1500 and 1750 are today generally considered mercantilists; originally the Standard English term was "mercantile system". English merchant Thomas Mun (1571–1641) as a major creator of the mercantile system, especially for his Treasure by Foreign Trade (1664) and Perhaps the last major mercantilist work was James Steuart’s Principles of Political Economy published in 1767. POLICIES OF MERCANTILISM High tariffs, especially on manufactured goods, are an almost universal feature of mercantilist policy. Other policies have included: Building a network of overseas colonies; Forbidding colonies to trade with other nations; Banning the export of gold and silver, even for payments; Forbidding trade to be carried in foreign ships; Export subsidies; Promoting manufacturing with research or direct subsidies; Maximizing the use of domestic resources; Restricting domestic consumption with non-tariff barriers to trade.
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