Country-based Theories

• View trade in a macro perspective from the point of view of a country or nation and focus on trading phenomenon, particularly exports and imports
• Are international trade theories that discus the evolvement since the 16th century.

• Consists of the following theories:

·Mercantilism Theory

·Absolute Theory Advantage

·Comparative Advantage

·Heckscher-Ohlin

Firm-based Theories:

• Theories developed from classical country-based theories and supported with empirical research
• Attempt to explain business phenomena related to international trade.
• Consists of the following theories:

·Country Similiarity

·Product Life Cycle

·Porter’s Diamond Theory

Note:

• Both Country-based and Firm-based theories though differences in perspective, they are interlinked and complement each other.

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