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 have to pay you the difference in gold and silver, enabling you to amass more treasure. With the treasure acquired the realm could build greater armies and navies and hence expand the nation’s global influence.
Politically, mercantilism was popular with many manufactures and their workers. Export-oriented manufacturers favoured mercantilist trade policies, such as those giving subsidies or tax rebates, which stimulated their sales to foreigners. Domestic manufacturers threatened by foreign imports endorsed mercantilist trade policies, such as those imposing tariffs or quotas, which protected them from foreign competition (Mahoney, Trigg, Griffin, & Pustay, 1998).
Most members of society are hurt by such policies. Government subsidies of exports for selected industries are paid for by taxpayers.
Mercantilist terminology is still used today, an example when television commentators and newspaper headlines report that a country suffered an ‘unfavourable’ balance of trade-that is, its exports were less than its imports.
Mercantilist policies are still politically attractive to some firms and their workers, as mercantilism benefits certain members of society. Modern supporters of these policies are known as neo-mercantilists, or protectionists (Mahoney, Trigg, Griffin, & Pustay, 1998).
The mercantilists were a group of economists who preceded Adam Smith. They judged the success of trade by the size of the trade balance (Lipsey, & Chrystal, 1996).
Absolute Advantage
The theory of absolute advantage, suggests that a country should export those goods and services for which it is more productive than other countries, and import those goods and services for which other countries are more productive than it is (Mahoney, Trigg, Griffin, & Pustay, 1998).
Adam Smith was the first to come up with the theo...
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In the Humanistic Tradition the author, Gloria Fiero introduces Adam smith as a Scottish moral philosopher, pioneer of political economy, and a key figure in the Scottish Enlightenment. Smith also known as the Father of Political economy, is best known for one of his two classic works An Inquiry into the nature and causes of the Wealth of Nations. Fiero looks at Smith’s work because the division of labor is important. One thing Smith thinks is even more important for creating a wealthy nation, is to interact and have open trade with different countries. Fiero states,“It is necessary, though very slow and gradual, consequence of a certain propensity in human nature which has in view no such extensive utility; the propensity to truck, barter,
The economic concept of protectionism dates back to Adam Smith’s idea of comparative and absolute advantage. The country with the ability to produce the same amount of a good or service with fewer resources than another country has the absolute advantage. However, if the other country has a lower opportunity cost of producing that same good or service, they have the comparative advantage. Smith argued that “If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry employed in a way in which we have some advantage” (Smith, 1904, IV.2.12).
Smith, Adam. 1981 [1776]. An Inquiry Into the Nature and Causes of the Wealth of Nations. Indianapolis, Indiana: Liberty Press.
Adam Smith was a man of many achievements. As a Scottish philosopher and political economist he became famous by his classical and influential books. In 1759 he wrote a book called “The Theory of Mortal Sentiments”and in 1775 he wrote another called “An Inquiry to the Nature and Causes of the Wealth of Nations”. Known as the “father of modern economics” Adam Smith has greatly influenced society. Adam Smith’s history impacted the way that our society is today. Adam’s childhood, environment, education and events throughout his life contributed to the way that we view society. With Adam’s theories and great works he molded a pathway to different stand points on the public and its society. Among his great works are the wealth of nations and inquiry to the nature and causes of the wealth of nations alongside the theory Adam named the invisible hand. Adam also thought about the public from an economic and political stand point. Due to factors that influenced Adam’s early life, he was able to learn from those before him to become the great economist, politician, and philosopher that he was. This way, even though Adam Smith lived during the time of the scientific revolution his words of wisdom in politics and the economy are still used today in the public.
Adam Smith has developed and created the most influential works of economic, philosophy and beyond. Adam Smith made an economic model for his theory involving the economic market through his books. Adam Smith produced his own book titled “The Theory of Moral Sentiments” which revolved around morals of humans and mercy toward a person or a community. On the other hand, the book did have a slight vision of the rejection of loving yourself and the slim idea what an individual wants for his or her self. Adam Smith also produced another book titled “An Inquiry into the Nature and Causes of the Wealth of Nations” that was based on the concept of the politics of economy. This book also gave the idea that wealth’s amount is determined by the amount of work not by length. Adam Smith’s book eventually g...
In conclusion, the novel The Catcher In the Rye must be banned from the eighth grade curriculum. The story is a negative influence to young readers. It contains countless profane words. Lastly the amount of sexual references is absurd for an eighth grade classroom. Schools, as well as teachers must realize the undesirable content of this novel and protect, the student from its damaging influences.
... is that it opens up new markets for more profits and lower the cost of goods if they were imported. This idea would increase the potential wealth of nation; however, the idea of mercantilism only supports the immediate nation’s wealth.
Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. 4th Edition. Edited by R.H. Campbell and A.S. Skinner. 1776. Reprint, Oxford: Clarendon Press, 1979.
"Adam Smith." Adam Smith. Library of Economics and Liberty, 2008. Web. 4 Feb. 2011. .
Smith, A. (1776). An inquiry into the nature and causes of the wealth of nations [electronic resource]. Dublin: printed for Messrs. Whitestone, Chamberlaine, W. Watson, Potts, S. Watson and 15 others in Dublin.
Trade was important to the Maritimes. Up to 1846 Britain had provided the British North American colonies with a market for their goods, but then began a policy of free trade. Because there were no tariffs placed on any country the colonies lost a sure market for their goods. Many colonists were concerned that some might consider union with the United States and the British North American colonies was brisk with large amounts of lumber and grain being imported by the U.S. When the Americans ended the Reciprocity Treaty in 1865, many Maritimers became uneasy about the economic future. It became apparent that in order to develop thriving trade; new economic links would have to be developed. 3
Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. Ed. Edwin Cannan. 1904 ed. London: Methuen, 1776. Library of Economics and Liberty. Web. 4 May 2014. .
accept the gifts from their children with no hesitation, how eager they are to compliment and
Motherhood is a term used and displayed in everyday life. It has several aspects that require many talents and hard work. However, sometimes motherhood needs little to no talent or dedication, as well. Motherhood is an opportunity to serve others and have a big impact on other’s life.
As Thomas Mun wrote “England’s Treasure by Foreign Trade”, never would he have imagined that the words in his book would forever be remembered as the basis for the mercantilist school of economic thought. Almost four centuries later the words of Thomas Mun and mercantilists such as Sir William Petty still resonate in the mind of economists. Even though traces of mercantilism are difficult to find in practice today, mercantilism is by no means a thing of the bygone days. From the 16th century to the 20th century, mercantilism has played a vital role in the economic policies of many nations. With four centuries of history, there is without a doubt that mercantilism is deeply rooted in the global economic scene. Historical footprints of mercantilism can be found all over the world; from Europe to America to Asia, mercantilism has seen glory and prominence. Even in its decline mercantilism attempted to adapt to changing economic spheres by detaching applicable mercantilist tenets from the school and applying them to multiple economic issues.