Free trade theory:

A sound understanding of  trade theories  has assumed greater  importance  in  the realms of trade policy-making  in the context of recent 'trends and debates on globalization and  trade liberalization. Given  this  imperative an attempt has been made  to first, present different theories of the classical vintage  in a simple manner.  The theories are  posited in such  a way  that  they highlight how different determinants were emphasized upon by different trade theorists in order to emphasize the potential gains from international trade. Some of the major limitations of these theories are also important to understand and it is undertaken with a view to compare  and contrast different strands of thoughts.

Initially, an explanation is rendered to the pure theory of international trade as propounded by Adam Smith  through the theories of absolute advantage. This is Mer  contrasted with the advancements made by Ricardian comparative costs  concepts. Furthermore, the Heckscher-Ohlin Theorem and its Extensions in the  forms of Stolper-Samuelson theorem,  Rybczynskh  theorem and factor-price equalization theorems are presented. Finally, a brief discussion on the empirical testing of comparative cost and the Heckscher-Ohlin Theorems is also given.