ECO205: (National Economy and Growth) Illustrate three (3) other trade theories, with real-world examples that might offer better representations of trade patterns

Module / Subject / School:

ECO205: National Economy and Growth

Requirements:

Suppose the above Ricardian model does not predict actual trade patterns in the real- world accurately. Illustrate three (3) other trade theories, with real-world examples (provide sources where appropriate), that might offer better representations of trade patterns, and discuss the key differences and limitations in these trade theories with respect to the Ricardian theory. You do not have to provide numerical examples or graphs for this part. (Word limit: 900 words)

(40 marks)

What we score:

77%

Our Writer’s Comment

First, choose three trade theories that offer different perspectives compared to the Ricardian model. Some strong options might be the Heckscher-Ohlin theory, New Trade Theory, and the Gravity Model of Trade. Start by briefly explaining each theory in a way that highlights how it differs from the Ricardian model. For example, the Heckscher-Ohlin theory considers factor endowments like labor and capital, while the Ricardian model focuses solely on comparative advantage based on labor productivity.

Next, illustrate each theory with real-world examples. For instance, you could discuss how the Heckscher-Ohlin theory explains the trade patterns between developed and developing countries, or how New Trade Theory accounts for economies of scale in industries like automobile manufacturing. Make sure to reference sources where appropriate to support your examples—this not only strengthens your argument but also shows your ability to connect theory to real-world data.

Then, discuss the key differences and limitations of these theories compared to the Ricardian model. Point out how the Ricardian model is simplified, assuming only one factor of production (labor) and constant returns to scale, which might not hold true in reality. Contrast this with the more complex assumptions and predictions of the other theories.

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Sample Assignment

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