Mercantilism And Comparative Advantage Theory

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As (Lisa l martin) stated that international trade provides an opportunity and risk to a group of nation or individual. It provide an opening to other nations economy as well as to the economy of specialised nation. while international trade become important to business in countries they developed different theories to explain the need of trade and what to trade. There are different trade theories like Mercantilism, non-mercantilism, absolute advantage thory, comparative advantage theory are some of those.
Mercantilism is an economic system used in European countries in 1800s. and 16th to the mid 18th century. under mercantilism the countries wealth is measured by the accumulation of valuable metals like gold and silver.(Piggott. j and cook .m)
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The theory says that America has an comparative advantage on producing both car and aircraft over Europe. As long as Europe is not equally less efficient in producing both cars and aircraft. Still Europe ac specialise on producing a single product (such as car) which has comparative advantage rather than absolute advantage. A country has a Comparative advantage in a commodity when it has An higher popularity in processing Also it need similar preference On a commodity The point when its level from claiming popularity will be low. (Piggott &mark cook) withstanding the benefits characterize by using Comparative advantage there are different constraint which can be hinder perhaps even beat the objective of Comparative Nivola (1997) said that the cost of transportation from one country to another country thinking it may completely remove Comparative advantage driven by two country. There is only two countries engaged in the process of production as well as consumption of the two goods. The only resources which is non transferable is the labour and cannot be considered as a theory to
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