What are the similarities and differences between traditional trade theory and new trade theory?

Comparison between new trade theory and traditional trade theory;

Mainstream international trade theory: As a special branch of theory, international trade theory began with Adam Smith. He put forward the concept of absolute cost in The Wealth of Nations, which was later revised by Ricardo and formed the theory of comparative cost. Comparative cost theory reveals the basis of mutually beneficial trade and the source of trade benefits.

Then Olin expounded this in his book Inter-regional Trade and International Trade, and put forward the theory of factor endowment (H-0 model). This theory points out that the reason for the difference of comparative cost lies in the difference of resource endowment in different countries, and makes a definitive conclusion on the commodity and factor model of international trade. So far, it has laid the two-layer core of traditional international trade theory.

Extended data:

New production factor theory;

The theory of new factors of production endows the factors of production other than land, labor and capital with richer connotations, and holds that it also includes new factors of production such as natural resources, technology, human capital, research and development, information and management, and explains the basis of international trade and the changes of trade pattern from the perspective of new factors.

1, natural resources theory

In 1959, J. Vanek, an American scholar, put forward the viewpoint that the scarcity of natural resources is used to explain Leontief's paradox. He believed that the development or refining of imported natural resources in the United States consumed a lot of capital, which would increase the capital intensity of imported substitute products. After deducting the influence of resources, the import of capital-intensive products in the United States will be less than its export.

2. Human capital theory

The human capital theory represented by D.B. Keesing, P.B. Caanen and T.W. Schultz further expands the H-O theory and introduces human capital as a new factor of production.

Baidu Encyclopedia-International Trade Theory