International Trade and Enterprise of China
International trade is where different countries get involved in the exchange of capital, labor, services and goods. This trade takes place between countries’ boarders. The exchange of goods and services of countries leads to trade. Different countries trade with each other in the common international market. A country is endorsed differently depending on their wealth, resources, labor and capital. A country will not have all the necessary factors of production. Therefore, a country will go into the market and get a seller country that has what it needs and trade, hence international trade (Eddy, 2012).
According to the Ricardian model, countries have different labor productivity capability and have different resources.One country will have a readily available skilled labor for production that another country needs for her production of goods and services. This other country may have resources that the country with skilled labor needs. Therefore, these two countries will acquire what they need for the production of services. This exchange leads to trade, hence international trade. The Richardian model shows us that,trade between a country occurs because the existence of difference in labor productivity, and difference in resources among the countries (Johnson, 2012).
The Heckscher-Ohlin theory also explains the existence of international trade among countries. Differences in land, labor skills, physical capital, and labor create the market for the factors of production. These differences make different countries be involved in trading activities. A country with capital will look for labor in order to produce. Labor is a major factor of production. The country with ready labor will provide its labor to the country with capital. She will receive capital and give out her labor. This, therefore, leads to the existence of trade between different countries, hence international trade...