Trade based on technological gaps is closely related to:

Question

Quizplus · Accepted Answer

The product-cycle theory suggests that a firm will initially produce a new product in its home market, but as the product becomes more standardized and production processes become more efficient, production will shift to other countries where labor and other production costs are lower. This theory is closely related to trade based on technological gaps, as countries may have different levels of technological advancement and may specialize in producing certain goods based on their comparative advantage in that technology. The H-O theory and factor price equalization theorem are focused on the effects of comparative advantage based on labor and capital resources, while Linder's theory focuses on similarities in consumer preferences between trading partners.

Trade Based on Technological Gaps Is Closely Related To