In a short essay, describe the two leading theories of international trade and investment. What do economists and scholars hope to learn from an analysis of international trade and investment?

What will be an ideal response?

Two theories exist regarding international trade and investment. The first group includes nation-level theories. These are classical theories that have been advocated primarily since the 18th century. The second group includes firm-level theories. These are more contemporary theories of how firms can create and sustain superior market position.

Economists, managers, and academic scholars have offered both classical and contemporary theories in hopes of determining the economic rationale for international trade and investment. They debate why nations should promote trade and investment with other nations and also how nations create and sustain comparative advantage.