Introduction to International Economics a- Explain how the role of the Mercantilism practice between 1500- to the late 1700s century has influence the International Trade Theories in the 19th -21st century. In general, international trade is economic trade, such as trade in products, the movement of capital and labour and service trade, that made beyond the border. International trade theory is a brunch of economics that the study about every motive for economic activity and the effects made across the border.
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To put in concretely, international trade theory treats why trade occurs between nations, what products a nation exports and imports when they participate in trade, what profits countries that taking part in trade will gain and how the profits are distributed among nations. It is also important subject of study that what economic effect is, when a nation interrupt free trade flows directly and indirectly by trade policy. International trade theory was started with the publication of “The Wealth of Nations” in 1776, Adam Smith, however before then, there was some writings already about international trade and these writings was contained economic philosophy as known as mercantilism. Mercantilism was the economic theory supporting economic policies that European countries had adopted in 15th- and 18th century during the collapse of the feudal system. Mercantilist argued that restricting the import and encouraging the export in order to increase the wealth of the country. Mercantilism thought profits occur in the process of distribution, not the process of production, and that how much precious metals they have such as gold and silver being used all over the world means the wealth of the nation. But it led to depreciation of gold and silver because the amount of precious metals became excessively large. Then over the end of the 18th century and 19th century, mercantilism have been changed in the form of economic nationalism. Economic nationalism found the motive power of national economic development from within. They argued that to maintain independent status politically, economic also need to secure an independent phase. In the late 20th century, Neo-mercantilism emerged because it was difficult to predict what will happen in the future so they argued that the need to protect domestic manufacturers, economically ahead in another country and strengthen national security. b- Examine why countries engage in trade and the benefits of specialization and trade between countries. c- When you sit down for your evening meal try to estimate the number of people and transactions that are required to bring your meal to you – be as lateral, imaginative and as specific as possible. Question 2 – Trade structure of your chosen countries a- Analysis b- Data table Table 1 : Basic economic indicators and trade structure of Spain and Saudi Arabia in 2013/2014
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