International Trade could be described as the exchange of both products and services from a country to another different country. International Trade Theory is a sub-area of economics that analyzed the structures if International Trade, its heritage, along with its welfare allegations. Both International Trade theory along with economics has been growing with a purpose to evaluate the impacts of Trade Policies. The International Trade Theories aim to help the economists, governments, as well as the businesses to get better knowledge of International Trade and the methods to indorse, control, and manage it (Gandolfo, 2013).

International Trade Theories

1. Mercantilism of International Trade Theory

This theory proposed that the wealth of a country was measured by the quantity of gold and silver sources that it acquired. This theory assumes that a country must be able to increase its acquirement of gold and silver by supporting exports and depressing imports (Negishi, 2013).

2. Absolute Advantage of International Trade Theory

This theory assumes that a country must manufacture only the types of products which are the most efficient, and then trade the types of products that are not efficient.

3. Comparative Advantage of International Trade Theory

The theory has clearly mentioned that a country should specialize in both producing and exportation of the products over which considered to have comparative advantage and import the products that considered to be comparative disadvantage.

4. Heckscher-Ohlin of International Trade Theory

This theory put more focus on how a country could achieve a comparative advantage by manufacturing the products that were available in a great quantity in the country. This theory based on some aspects such as land, labor, as well as capital, all of these were claimed to be the sources that provide the capitals intended for investment in .

5. Product Lifecycle Theory of International Trade Theory

This theory has proposed that the manufacturing of the new product will appear totally in the home country of its invention (Negishi, 2013). There are three different stages revealed in this theory which are:

· New product

· Maturing product

· Standardized product

Conclusion of International Trade Theory

International Trade theory along with economics has been growing with a purpose to evaluate the impacts of Trade Policies. All of the International Trade Theories aim to help the economists, governments, as well as the businesses to get better knowledge of International Trade and the methods to indorse, control, and manage it.

References of International Trade Theory

Gandolfo, G. (2013). International Trade Theory and Policy. Springer Science & Business Media.

Negishi, T. (2013). Developments of International Trade Theory. Springer Science & Business Media.