International Trade Theory





International Trade Theory

1.         The global view on trade has changed considerably in relation to the dynamic shifts between Adam Smith’s mercantilism and David Ricardo’s notion of comparative advantage. In essence, the theory of mercantilism advocated for a relationship that existed between the wealth of a state and the quantity of silver or gold holdings it possessed. Based on this, the theory’s main idea was that a state could boost or increase its gold holdings by facilitating exports and depressing the level of imports. Hence, the aim of each state involved attaining a trade surplus or averting from a trade deficit. In this respect, Smith’s theory asserted evidence of a zero sum game via the notion of absolute advantage. Nonetheless, the shortcomings of the respective conjecture were scrutinized in David Ricardo’s comparative advantage. For Ricardo, comparative advantage occurs in the event that a state fails to manufacture a commodity more efficiently in comparison to another country. Despite this, the said state has the capability of producing better and effectively when based on other goods.

2.         The improvements that Herchur and Olan made were based on the shortcomings that Ricardo’s idea of comparative advantage failed to address. Foremost, the scarcity of resources was not explored in the premise. For Ricardo, each state possessed a consistent state of development based on the resources they held. However, this premise is counteracted since different states possess disparate conditions of development. Secondly, the criticism against Ricardo’s theory was based on the implications of endowment, specifically on the allocation of income. Accordingly, the theory failed to establish the correlation between trade and aspects of endowment as well as the impact of such dimensions on the deviations in income.

Calculate your order
275 words
Total price: $0.00

Top-quality papers guaranteed


100% original papers

We sell only unique pieces of writing completed according to your demands.


Confidential service

We use security encryption to keep your personal data protected.


Money-back guarantee

We can give your money back if something goes wrong with your order.

Enjoy the free features we offer to everyone

  1. Title page

    Get a free title page formatted according to the specifics of your particular style.

  2. Custom formatting

    Request us to use APA, MLA, Harvard, Chicago, or any other style for your essay.

  3. Bibliography page

    Don’t pay extra for a list of references that perfectly fits your academic needs.

  4. 24/7 support assistance

    Ask us a question anytime you need to—we don’t charge extra for supporting you!

Calculate how much your essay costs

Type of paper
Academic level
550 words

How to place an order

  • Choose the number of pages, your academic level, and deadline
  • Push the orange button
  • Give instructions for your paper
  • Pay with PayPal or a credit card
  • Track the progress of your order
  • Approve and enjoy your custom paper

Ask experts to write you a cheap essay of excellent quality

Place an order
Verified by MonsterInsights