MGT 3660 Lecture Notes - Lecture 6: New Trade Theory, Absolute Advantage, Invisible Hand

• School: Georgia Tech
• Department: Management
• Course: MGT 3660
• Professor: Vijay Venkataraman

Document Summary

Lo 6-1 understand why nations trade with each other. Lo 6-2 summarize the different theories explaining trade flows between nations. Lo 6-3 recognize why many economists believe that unrestricted free trade between nations will raise the economic welfare of countries that participate in a free trade system. Lo 6-4 explain the arguments of those who maintain that government can play a proactive role in promoting national competitive advantage in certain industries. Lo 6-5 understand the important implications that international trade theory holds for management practice. Free trade refers to the absence of barriers to the free flow of goods and services between countries. Government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. Some international trade is beneficial even for products a country can produce for itself. Limits on imports are often in the interests of domestic producers but not domestic consumers.