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In this module, we will continue the introduction of globalization by examining the principle of comparative advantage, which underlies classical trade theory and is the fundamental justification for free trade and globalization. Trade theory based on comparative advantage also seeks to explain why trade occurs and what advantages accrue.
3: Critical Thinking Assignment – International Trade Theories
Comparative advantage influences international trade patterns. Countries are constantly trying to achieve and/or maintain it. However, the determinants of a country’s comparative advantage are numerous. In a critical essay, please:
-Explain factor-price structures considering the Hecksher-Ohlin (H-O) model.
-Appraise the challenges that may be encountered by a developing versus a developed nation.
-Analyze in which commodities, other than oil, will the Kingdom of Saudi Arabia have a comparative advantage according to the H-O model, after the Saudi Vision 2030 is fully implemented?
Directions:
Your essay is required to be 5 to 6 pages in length, which does not include the title page and reference pages, which are never a part of the content minimum requirements.
Support your submission with course material concepts, principles, and theories from the textbook and at least three scholarly, peer-reviewed journal articles. Use the Saudi Digital Library to find your resources.
Use Saudi Electronic University academic writing standards and follow APA style guidelines.
It is strongly encouraged that you submit all assignments into Turnitin prior to submitting them to your instructor for grading. If you are unsure how to submit an assignment into the Originality Check tool, review the Turnitin – Student Guide for step-by-step instructions.
Review the grading rubric to see how you will be graded for this assignment.
Learning Outcomes
Critique the factor endowment theory.
Critique the implications of factor endowment theory and its two most influential extensions to the case of trade between countries with different endowments of labor and capital.
Assess the value of the theory of comparative advantage and the new trade theory.
Readings
Required:
Chapter 3 in International Economics
Deligonul, Z. S., & Cavusgil, S. T. (1997). Does the Comparative Advantage Theory of Competition really replace the Neoclassical Theory of.. Journal of Marketing, 61(4), 65. https://doi.org/10.1177/002224299706100405
Recommended:
Chapter 3 PowerPoint slides
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