9/21/2023 According to goldman and longhofer, what is the traditional idea of a global city?Read Now![]() ![]() ![]() The same general theory of value which explains the inter-regional trade can also be applied to international trade. ![]() Thus, there is no basic distinction between inter-regional trade and international trade, and there is no justification for a separate theory of international trade. The similarity between internal trade and international trade is clear from the following points- (a) Immobility of factors is not a special feature as between countries, but can exist even in different regions of the same country (b) similarly, labour and capital can move both within a country as well as between the countries (c) cost of transport is always there in both internal and international trade (d) existence of different currencies does not pose any problem for international trade because different currencies are connected with each other through a system of exchange rate. He remarked- “International trade is but a special case of inter-local or inter-regional trade.” Ohlin, on the contrary, believes that there is no basic difference between local or inter-regional trade and international trade, and no separate theory of international trade is needed. The difference between the international trade and internal trade arises due to various types of differences between the countries, such as- (a) differences in efficiency in producing different goods (b) immobility of factors of production (c) barriors caused by distance and other physical factors (d) use of different currencies (e) existence of artificial barriers, such as customs duties and other restrictions on trade etc.Īll such differences exist between the countries and not within a country, and hence a need for a separate theory of international trade. Therefore, there is a need for a separate theory of international trade. ![]() The following are the general features of the modern theory of international trade:Īccording to the classical economists, international trade was basically different from internal trade. ![]()
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