Through these theories, human beings have tried to understand the reasons for trade between nations, their effects and their different implications. this theory was the “commercial revolution”, the transition from local economies to national economies, from feudalism to capitalism, from a rudimentary trade to a larger international trade. This has led Hicks to formulate his theory of the trade cycle in a growing economy. Theories of International Trade.ppt from ECONOM 101 at University of Baguio. Theories of FDI may be classified under the following headings: 1. Theories of International Trade By: BRIAN R. FLORES, MPA (Co-Head, Department of Social Sciences and Instructions. 2. Production Cycle Theory of Vernon Production cycle theory developed by Vernon in 1966 was used to explain certain types of foreign direct investment made by U.S. companies in Western Europe after the Second World War in the manufacturing industry. View Sp20_complete_PPT_2_)Business_Cycle_Theories_copy.pptx from MACROECONO 101 at Glendale Community College. In simple terms, banks will lend out money at rates lower than the risk in which that money will be used. A few of the old theories are no longer accepted now. View 8. Mercantilism was the economic system of the major trading nations during the 16th, 17th, and 18th century, based on the premise that national (4) According to Duesenberry, it presents a mechanical explanation of the trade cycle because it is based on the multiplier-accelerator interaction in rigid form. Theories of International trade: Mercantilism: According to Wild, 2000, the trade theory that state that nations ought to accumulate money wealth, typically within the style of gold, by encouraging exports and discouraging imports is termed mercantilism. It arose in England in the middle of the sixteenth century. in the 1960s. Raymond Vernon, a Harvard Business School professor, developed the product life cycle theory A modern, firm-based international trade theory that states that a product life cycle has three distinct stages: (1) new product, (2) maturing product, and (3) standardized product. Product Life Cycle Theory; In the 1970s, Raymond Vernon introduced the notion of using a product’s life cycle to explain global trade patterns, in the field of marketing. Them main objective of every trade is to get executed at the best price and settled at the least risk and less cost. According to theory, as the demand for a newly created product grows, the home country starts exporting it to other nations. You will be directed to … A full treatise is required to discuss in fuller details all these theories. We shall discuss here only the most important theories of business cycle. 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