Modern Theory in International Trade

There are several theories that determine the quality of trading among the states. While some of which are based on the variation in the production elements as set forth in the modern theory in the international trade, the others are based on the relative costs as shown in the classical theory.  And the modern theory explained the concept of cash exchange and determination of exchange rates and the international balance, considering the concept of expenditure and cost. Yet in general, the money constitutes the basis on which the modern theory in the international trade is based.

By the end of the course, participants will be able to:

What are the factors on which the modern theory in the international trade has been depended for explaining the international specialization?:

Variation in production elements:

Here, the theory in the international trade refers to the possibility for consolidating the products prices with their availability or scarcity.

In order not to disrupt any commodity in the whole states, so every state shall be specialized in producing specific commodity so as to provide it with the great potentials to be available. Accordingly, the production costs for theses commodities will decrease.

Cost reduction and increased revenue in productive extension:

The production elements such as the land, the business, and the capital shall be considerably available in the states in order to be specialized in producing a specific commodity. However, the demand from the states might increase, and so the production quantity will increase and the cost will decrease in return.
Consequently, the prices will decrease, which contributes to the trade channels expansions. However, all that shall be done within safe sale and purchase, achieving the balance in products prices. And the greater variances will be the share of transport operations or custom duties.