New trade theories added to the old theories. Modern economists has contribute more on old theories to make the theory of international trade more better and realistic. In his theory, David Ricardo depended on the restrictive assumption of the labor theory of value, in which labor was assumed to be the only factor input. But, modern economists believe that there are several other factor inputs and labor is only one of them. So they provide …
showed first 75 words of 572 total

showed last 75 words of 572 total
…trade patterns resulted by the trade in manufactured goods which factor-endowment theory didn't explain in its trade theory. According to Linder, much of international trade involves manufactured goods that's why demand condition play an important role in explaining overall trade patterns. This theory of overlapping demand developed by Linder gives us and idea of how trade takes place by explaining that a nation's exports are the result of extension of production for the domestic market.