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International Business, 8th Edition by Michael H. Moffett, Iikka A. Ronkainen, Michael Czinkota

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CHAPTER 3

The Theory of Trade and Investment

CHAPTER CONTENTS & LEARNING OBJECTIVES

THE AGE OF MERCANTILISM

1. To understand the traditional arguments of how and why international trade improves the welfare of all countries

CLASSICAL TRADE THEORY

2. To review the history and compare the implications of trade theory from the original work of Adam Smith to the contemporary theories of Michael Porter

FACTOR PROPORTIONS TRADE THEORY

3. To examine the criticisms of classical trade theory and examine alternative viewpoints of which business and economic forces determine trade patterns between countries

INTERNATIONAL INVESTMENT AND PRODUCT CYCLE THEORY

4. To explore the similarities and distinctions between international trade and international investment

THE NEW TRADE THEORY: STRATEGIC TRADE

5. To evaluate the trade theories of Paul Krugman and Michael Porter and their relationship to business and government's approaches to trade policy

THE THEORY OF INTERNATIONAL INVESTMENT

6. To understand the theory of international investment and how it relates to firms and buyers

China, Trade, and the Global Recession

The global recession of 2008–2009 tested many of the theoretical principles of international trade and international economics. One such principle is that with recession comes slowed commercial and consumer spending, and slowed spending means fewer imports. The Chinese economy has enjoyed some of the largest trade surpluses in the global economy in recent years, and in the early stages ...

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