Question

Explain how the theories of trade differ in terms of their support to governmental intervention?

Answer 1

For explain international trade, international trade theories are simply different theories. Trade is the idea of two individuals or organizations exchanging goods and services. The definition of this exchange between persons or organisations in two different countries is then international trade.

Since they think they profit from the exchange, people or individuals trade. The goods or services may be necessary or wanted. While it sounds very straightforward on the surface, there is a lot of philosophy, policy, and business strategy that makes up international trade.

Smith, Ricardo, and Heckscher-Ohlin's ideas were part of the free trade scenario. The case for unrestricted free trade is that import barriers as well as export incentives (such as subsidies) are self-defeating, resulting in wasted resources. It is possible to interpret both the new trade theory and Porter's theory of national competitive advantage as supporting some limited government intervention to support the development of certain export-oriented industries.