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INTERNATIONAL ECONOMICS AND FINANCE - Essay Example
Author : beaulahhyatt
Finance & Accounting
Pages 8 (2008 words)
INTERNATIONAL ECONOMICS AND FINANCE Table of Contents Summary 3 David Ricardo: Ricardian theory of international trade 3 Heckscher-Ohlin - Heckscher Ohlin theory of international trade 5 Controversies in international trade and current policy problems: Practical examples 6 Conclusion: Opinion on international trade 8 Reference 9 Summary International trade can be explained as the exchange of goods, services and capital between different countries in the international platform…
The two eminent theories of Heckscher-Ohlin and Ricardian theory of international trade by David Ricardo have been discussed below. An introspection of the two theories provides an insight of the main controversies in the field of international trade and the current problems in policy that is affecting international trade. The Ricardian model explains comparative advantage in international trade by taking into account factors like natural resources and technology advancements of a country. The factors of comparative labour and capital have not been considered by Ricardo while explaining comparative advantage. The Heckscher-Ohlin model of international trade on the other hand assumes that the labour and capital are abundant resources that vary from one country to another and technology in long term prospects are assumed to be same. Heckscher-Ohlin derived that a country exports such goods that make optimal utilisation of local factors and imports those goods which could not make use of available factors. David Ricardo: Ricardian theory of international trade International trade is necessary for the sustenance of globalization. ...