International trade theory is a sub-field of economics which analyzes the patterns of international trade, its origins, and its welfare implications. International trade policy has been highly controversial since the 18th century. International trade theory and economics itself have developed as means to evaluate the effects of trade policies.
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In this Dossier
- ⭐ Core Definition: International trade theory
- International trade theory in the context of Factor endowments
International trade theory in the context of Factor endowments
A factor endowment, in economics, is commonly understood to be the amount of land, labor, capital, and entrepreneurship that a country possesses and can exploit for the production of capital and goods. Countries with a large endowment of resources tend to be more prosperous than those with a small endowment if all other things are equal. This concept of the relationship between a nation's factor endowment and its economic productivity underpins much of basic macroeconomics, such as the comparative advantage, international trade theory, and the Solow-Swan model.
Some argue that the development of sound institutions to access and equitably distribute these resources is necessary in order for a country to obtain the greatest benefit from its factor endowment.
View the full Wikipedia page for Factor endowments