International Trade and Industrial Economics

The Comparative Advantage Theory, proposed by David Ricardo, suggests that countries should focus on producing and exporting goods in which they have a lower opportunity cost compared to other countries.

Absolute Advantage refers to a country's ability to produce a good with fewer resources or at a lower cost compared to other countries.

Protectionism is a trade policy that restricts the import of goods to protect domestic industries from foreign competition.

Purchasing Power Parity (PPP) is a theory that states that the exchange rate between two currencies should be equal to the ratio of the prices of a basket of goods in the two countries.

Appreciation refers to an increase in the value of a currency relative to other currencies, leading to a decrease in exports and an increase in imports.

Mercantilism is a trade policy that aims to promote exports and restrict imports to achieve a favorable balance of trade.

The Home Market Effect states that a country's domestic market size positively affects its elasticity of substitution between domestic and foreign goods.

Trade Surplus refers to a situation where a country's exports exceed its imports, resulting in a positive balance of trade.

Free Trade is a trade policy that aims to reduce trade barriers and promote free flow of goods and services between countries.

The Heckscher-Ohlin-Samuelson (HOS) model explains how differences in capital and labor endowments between countries determine their comparative advantage in producing different goods.

Trade Deficit refers to a situation where a country's imports exceed its exports, resulting in a negative balance of trade.

Protectionism is a trade policy that aims to promote domestic industries by providing subsidies or other forms of financial assistance.

The Dixit-Dixit-Stiglitz (DDS) model explains how product differentiation and increasing returns to scale can lead to multiple equilibria in trade patterns.

Depreciation refers to a decrease in the value of a currency relative to other currencies, leading to an increase in exports and a decrease in imports.

Economic Nationalism is a trade policy that aims to promote economic growth and development by attracting foreign investment and technology.