This has led Hicks to formulate his theory of the trade cycle in a growing economy. Them main objective of every trade is to get executed at the best price and settled at the least risk and less cost. Product Life Cycle Theory. Theories of International Trade By: BRIAN R. FLORES, MPA (Co-Head, Department of Social Sciences and 2. View 8. Mercantilism was the economic system of the major trading nations during the 16th, 17th, and 18th century, based on the premise that national It arose in England in the middle of the sixteenth century. this theory was the “commercial revolution”, the transition from local economies to national economies, from feudalism to capitalism, from a rudimentary trade to a larger international trade. Business Cycles: The Austrian business cycle theory (ABCT) is the simple observation that the issuance of credit (by banks) creates economic fluctuations that tend to be cyclical (see ). A full treatise is required to discuss in fuller details all these theories. Theories of International trade: Mercantilism: According to Wild, 2000, the trade theory that state that nations ought to accumulate money wealth, typically within the style of gold, by encouraging exports and discouraging imports is termed mercantilism. Through these theories, human beings have tried to understand the reasons for trade between nations, their effects and their different implications. We shall discuss here only the most important theories of business cycle. Instructions. (5) It ignores the effects of monetary changes upon business cycles. 6 main theories of international trade . Production Cycle Theory of Vernon Production cycle theory developed by Vernon in 1966 was used to explain certain types of foreign direct investment made by U.S. companies in Western Europe after the Second World War in the manufacturing industry. Raymond Vernon, a Harvard Business School professor, developed the product life cycle theory A modern, firm-based international trade theory that states that a product life cycle has three distinct stages: (1) new product, (2) maturing product, and (3) standardized product. View Sp20_complete_PPT_2_)Business_Cycle_Theories_copy.pptx from MACROECONO 101 at Glendale Community College. Important Theories 1. in the 1960s. (4) According to Duesenberry, it presents a mechanical explanation of the trade cycle because it is based on the multiplier-accelerator interaction in rigid form. You will be directed to … Product Life Cycle Theory; In the 1970s, Raymond Vernon introduced the notion of using a product’s life cycle to explain global trade patterns, in the field of marketing. According to theory, as the demand for a newly created product grows, the home country starts exporting it to other nations. A few of the old theories are no longer accepted now. 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