"Chapter 6: International Trade and Investment Theory" understand the motivation for international trade, summarize and discuss the differences among the classical country-based theories of international trade, use the modern firm-based theories of international trade to describe global strategies adopted by businesses. | ©2004 Prentice Hall 6- Chapter 6: International Trade and Investment Theory International Business, 4th Edition Griffin & Pustay ©2004 Prentice Hall 6- Chapter Objectives_1 Understand the motivation for international trade Summarize and discuss the differences among the classical country-based theories of international trade Use the modern firm-based theories of international trade to describe global strategies adopted by businesses ©2004 Prentice Hall 6- Chapter Objectives_2 Describe and categorize the different forms of international investment Explain the reasons for foreign direct investment Summarize how supply, demand, and political factors influence foreign direct investment ©2004 Prentice Hall 6- International Trade Trade: voluntary exchange of goods, services, assets, or money between one person or organization and another International trade: trade between residents of two countries ©2004 Prentice Hall 6- Figure Sources of the World’s Merchandise Exports, 2001 ©2004 Prentice Hall 6- The largest component of the annual $ trillion trade in international services is travel and tourism ©2004 Prentice Hall 6- Classical Country-Based Trade Theories Mercantilism Absolute Advantage Comparative Advantage Comparative Advantage with Money Relative Factor Endowments ©2004 Prentice Hall 6- Mercantilism A country’s wealth is measured by its holdings of gold and silver A country’s goal should be to enlarge holdings of gold and silver by Promoting exports Discouraging imports ©2004 Prentice Hall 6- Modern Mercantilism Neomercantilists or protectionists American Federation of Labor-Congress of Industrial Organizations Textile manufacturers Steel companies Sugar growers Peanut farmers ©2004 Prentice Hall 6- Disadvantages of Mercantilism Confuses the acquisition of treasure with the acquisition of wealth Weakens the country because it robs individuals of the ability To trade freely To benefit from voluntary exchanges Forces | ©2004 Prentice Hall 6- Chapter 6: International Trade and Investment Theory International Business, 4th Edition Griffin & Pustay ©2004 Prentice Hall 6- Chapter Objectives_1 Understand the motivation for international trade Summarize and discuss the differences among the classical country-based theories of international trade Use the modern firm-based theories of international trade to describe global strategies adopted by businesses ©2004 Prentice Hall 6- Chapter Objectives_2 Describe and categorize the different forms of international investment Explain the reasons for foreign direct investment Summarize how supply, demand, and political factors influence foreign direct investment ©2004 Prentice Hall 6- International Trade Trade: voluntary exchange of goods, services, assets, or money between one person or organization and another International trade: trade between residents of two countries ©2004 Prentice Hall 6- Figure Sources of the World’s Merchandise .
