A contentious issue in the new trade theory is that it generates an argument for _________________________.

Question

Quizplus · Accepted Answer

The contentious issue in the new trade theory is the argument for strategic trade policy or government intervention to help domestic firms gain a competitive advantage in global markets. This is because the theory suggests that certain industries or firms may experience increasing returns to scale and network externalities, which can result in a "first-mover advantage" for firms from countries that are home to those industries. To counteract this, governments may employ strategic trade policies, such as subsidies or tariffs, to promote the growth of domestic industries and protect them from foreign competition.

A Contentious Issue in the New Trade Theory Is That