Answer to Question #167437 in Management for Manyela

Question

The New trade theory suggests that the ability of firms to gain economies of scale has shown significant implications for international trade. Trade is mutually beneficial because it allows for the specialisation of production in specific locations where final products are produced.

Critique the new international trade theory propositions and ways in which this situation would be improved? What are the major problems this arrangement poses to the generation and movement of raw materials and finished products? 

Answer 1

Answer:

There are some essential issues in the critical international pattern of trade. The substantial economies of trade and there ought to be some network effects could occur in some major industries.

In some industries, 2 nations might not have visible variations in cost at a selected purpose of your time. in order that a nation has some special skills during a particular trade, there could also be some benefits in economies of scale.

The new trade theory could offer a tendency for powerful interested businesses with state support. It's going to cause inefficiency within the long term.