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 6-8 The largest component of the annual $1.5 trillion trade in international services is travel and tourismĬlassical Country-Based Trade Theories Mercantilism Absolute Advantage Comparative Advantage Comparative Advantage with Money Relative Factor Endowments 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 countriesįigure 6.2 Sources of the World’s Merchandise Exports, 2001Įuropean Union United States Japan Canada Other countries 4% 7% International Business, 4th Edition Griffin & Pustay 6-1Ĭhapter 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 6-2Ĭhapter 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 6-3 Chapter 6: International Trade and Investment Theory
