New trade theory suggests that nations may benefit from trade even when they do not differ in resource endowments or technology.

Question

Quizplus · Accepted Answer

New trade theory argues that even if two countries have the same resource endowments and technologies, they can still gain from trade by specializing in certain industries and achieving economies of scale, as well as from the benefits of knowledge spillovers and product differentiation. Therefore, the statement is true.

New Trade Theory Suggests That Nations May Benefit from Trade