OPENING CASE: The Ecuadorian Rose Industry
AN OVERVIEW OF TRADE THEORY
The Benefits of Trade The Pattern of International Trade Trade Theory and Government Policy
Country Focus: Is China a Neo-Mercantilist Nation?
The Gains from Trade Qualifications and Assumptions Extensions of the Ricardian Model Country Focus: Moving U.S. White Collar Jobs Offshore
The Leontief Paradox
THE PRODUCT LIFE CYCLE THEORY
Evaluating the Product Life Cycle Theory
NEW TRADE THEORY Increasing Product Variety and Reducing Costs Economies of Scale, First Mover Advantages and the Pattern of Trade Implications of New Trade Theory
NATIONAL COMPETITIVE ADVANTAGE: PORTER’S DIAMOND
Factor Endowments Demand Conditions Related and Supporting Industries Firm Strategy, Structure, Rivalry Evaluating Porter’s Theory Management Focus: The Rise of Finland’s Nokia FOCUS ON MANAGERIAL IMPLICATIONS
Location First-Mover Advantages Government Policy
CRITICAL THINKING AND DISCUSSION QUESTIONS
CLOSING CASE: Trade in Information Technology and U.S. Economic Growth
1. Understand why nations trade with each other.
2. Be familiar with the different theories explaining trade flows between nations.
3. Understand why many economists believe that unrestricted free trade between nations will raise the economic welfare of all countries that participate in a free trade system.
4. Be familiar with the arguments of those who maintain that government can play a proactive role in promoting national competitive advantage in certain industries.
5. Understand the important implications that international trade theory holds for business practice.
This chapter focuses on