International Trade Theory
International Trade Theory
International Trade Theory
THEORIES
Introduction to Global Business
BUS 1067
1.INTRODUCTION
• Since 1990s we have seen a great shift
towards greater free trade.
• The process resulted in the global flow of
goods and services which, in turn, has led to
competitive environment in which
international businesses work.
TRADE THEORY OVERVIEW
• FREE TRADE
Firm
strategy, Demand
structure, conditions
rivalry
Related and
Factor
supporting
endowments
industries
PORTER’S DIAMOND
• Firm strategy, structure, rivalry – conditions managing domestic
rivalry, the way companies are organized.
• Demand conditions – the nature of home demand for the product
• Related and supporting industries – presence/absence of supplier
industries that are internationally competitive
• Factor endowments – skilled labour or infrastructure necessary to
compete in a given industry