Chapter 1 INTRODUCTIONLEARNING OBJECTIVES At the end of this chapter, the student should: 1 Recognize the exponential growth of international trade in recent decades and reasons for it. 2 Have a basic idea of ancient and recent historical developments in the practice of logistics. 3 Know the basic theories of international trade. 4 Know the basic explanations of international trade. 5 Have a cursory exposure to the international business environment. PREVIEW This chapter lays the foundation of international trade, by reviewing its remarkable growth since the mid-twentieth century, as well as identifying the “main players” in world trade. An important foundation of this course is to understand the nature of international trade and why it is beneficial to countries. It therefore reviews the traditional trade drivers (cost, competition, market, and technology), as well as the main theories of international trade: the classic absolute advantage, comparative advantage and factor endowment, but also the International Product Life Cycle, and the cluster theory. Finally, the chapter closes on a description of the international business environment.