International Trade Theories Mercantilism Mercantilism was a sixteenth-century economic philosophy that maintained that a country’s wealth was measured by its holdings of gold and silver (Mahoney‚ Trigg‚ Griffin‚ & Pustay‚ 1998). This recquired the countries to maximise the difference between its exports and imports by promoting exports and discouraging imports. The logic was transparent to sixteenth-century policy makers-if foreigners buy more goods from you than you buy from them‚ then the foreigners
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why they grew so much over the past decade. Heckscher-Ohlin theory believes that the comparative advantage depends on the resources the country has; meaning land‚ labor‚ and capital. This is the extent to which Indian software industry goes. They have very good resources and mostly important they have a cheap labor. Engineers do get paid a lot but labor force has a very low income. Porter ’s Diamond goes in a different direction than Heckscher-Ohlin theory does. Porter believes that the reason
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THE ANTECEDENTS OF THE THEORIES OF INTERNATIONAL BUSINESS History and Background International business is a broad term‚ collectively used to describe all commercial transactions (private‚ government and semi-government) that take place between two or more nations. International business is a newly coined term‚ but the concept is quite traditional. Actually‚ the term international business is derived from “international trade”. In ancient days‚ producers of a country used to export their surplus
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international tile industry. Case Discussion Questions 1. To what extent does the theory of comparative advantage explain the rise of Italian tile firms to global pre-eminence in the tile industry? 2. To what extent does the Heckscher. Ohlin theory explain the rise of Italian tile firms to global pre-eminence in the tile industry? 3. Use Michael Porter’s diamond to analyse the rise to global pre- eminence of the industry. What does this analysis tell you about how firms gain
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1) From 1960 to 2009‚ (C) A) the U.S. economy roughly tripled in size. B) U.S. imports roughly tripled in size. C) the share of US Trade in the economy roughly tripled in size. D) U.S. Imports roughly tripled as compared to U.S. exports. E) U.S. exports roughly tripled in size. 2) Ancient theories of international economics from the 18th and 19th Centuries are (C) A) not relevant to current policy analysis. B) are only of moderate relevance in today’s modern international economy. C)
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Environments and Operations. Reading‚ MA: Addison-Wesley. Ehud‚ M. & Amit‚ M. 2007. International business‚ London: SAGE. Feenstra‚ R. 2004. Advanced international trade: theory and evidence Princeton‚ NJ: Princeton Univ. Press. Heckscher‚ E. & Flanders‚ J. 1991. Heckscher-Ohlin trade theory‚ Cambridge: Mass Press‚ cop. Kauser‚ S. & Shaw‚ V. 2004. "The Influence of Behavioural and Organisational Characteristics on the Success of International Strategic Alliances." International Marketing Review‚ Vol
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EC 239 Introduction to International Trade Instructor: Sharif F. Khan Department of Economics Wilfrid Laurier University Winter 2010 Suggested Solutions to Assignment 2 (Optional) Part B Short Questions B1. Question # 1 of Ch 2 (8th ed. of the textbook) Canada and Australia are (mainly) English-speaking countries with populations that are not too different in size (Canada’s is 60 percent larger). But Canadian trade is twice as large‚ relative to GDP‚ as Australia’s. Why should this be the case
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Mid-semester exam sample 21/02/2012 Shabbir Ahmad Mid Semester Exam- Sample questions Section 1-Multiple choice 1. Benefits of international trade are a. limited to tangible goods. b. limited to intangible goods. c. limited to all goods but not services. d. limited to services. e. not limited to any of the above categories. 2. The gravity model explains why a. trade between Sweden and Germany exceeds that between Sweden and Spain. b. countries with oil reserves tend to export oil. c. capital
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References: Deardorff‚ A. (June 2007). The Ricardian Model. The University Of Michigan. Web. Retrieved 14 December 2012 from http://www-personal.umich.edu/~alandear/courses/441/handouts/Deardorff-RicardianModel.pdf Leamer‚ E.E.(1995). The Heckscher-Ohlin Model in Theory and Practice. Princeton University. Web. Retrieved 14 December 2012 from http://www.princeton.edu/~ies/IES_Studies/S77.pdf Jing‚ F. (July 2008). Chinese see dramatic rise in quality of life: economist. China Daily. Retrieved 14
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Food 3. In which country is capital relatively abundant? Athens 4. In which country is labor relatively abundant? Tory 5. Based on your answers to 1 – 4 and using the Heckscher-Ohlin hypothesis‚ which country should specialize in the production of which good? Why? According to Heckscher-Ohlin hypothesis‚ countries will export products that utilize their abundant and cheap factors of production and import products that utilize the countries’ scarce factors. As I said before
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