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A branch of economics that deals with the economic interdependence among nations, which involves international trade, international finance, and the effect of trade and finance on a nation's well being (development).
International trade theory deals with the reasons for trade and the consequences of trade. International trade theory has evolved over the years from mercantilism to globalization. Mercantilists generally believed that trade should be restricted for nations to acquire bullion (pre cious metals) in order to become wealthy and finance large armies and expansionary wars. By the 18th century, however, David Hume's price-specie-flow doctrine strongly discredited the mercantilist way of thinking. Hume showed that the mercantilist theory is self-defeating and futile because of the inflationary consequences of stock-piled bullion.
Subsequent theories of trade have focused on resource ...