Week 3 - Week 3: International Trade Theory Introduction...

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Week 3: International Trade Theory Introduction This week, you will focus on the history of trade theory. Trade has played an important role in the history of many countries. You will examine how international trade theory has developed over time and what role it plays in the operations of today's global businesses. There is no single theory that can explain all patterns of international trade. Understanding the prominent theories can assist managers in identifying those factors that are important for global competition. You will also explore the growth of foreign direct investment (FDI). Global firms are investing funds in greater amounts than ever before. U.S. companies, for example, are pouring billions of dollars into overseas investments. Finally, you will also examine levels of economic integration, the way regional economic integration occurs, and its impact on the development and operation of global businesses. Consider the last time you traded for something—whether it was your friend's sandwich at lunch or the newest video game your friend bought before you did. What were you willing to trade? Consider the last time you purchased something online that you could have bought locally. What made purchasing the product online more attractive? Learning Outcomes By the end of this week, you will be able to: Analyze the economic forces that have, in recent decades, encouraged firms to operate on an international scale Reading Course Text: International business. Competing in the global marketplace by Charles W. L. Hill o Chapter 5, “International Trade Theory” Chapter 5 presents the major theories of international trade. The first theoretical explanations for trade arose in the fifteenth century, when people began to wonder why trade occurs and under what conditions it is beneficial. Since then, several trade theories have been developed. Understanding trade theories can help businesses decide
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Week 3 - Week 3: International Trade Theory Introduction...

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