Question

which of the following two theories justify some limited and selective government intervention to support the development of certain export - oriented industries?

a. the theory of mercantilism and the heckscher - ohlin theory
b. the theory of national competitive advantage and the heckscher - ohlin theory
c. the heckscher - ohlin theory and theory of comparative advantage
d. the theory of absolute advantage and the new trade theory
e. the new trade theory and theory of national competitive advantage

Explanation:

The new trade theory emphasizes economies - of - scale and imperfect competition, suggesting government can support industries to gain a competitive edge in exports. The theory of national competitive advantage by Porter also allows for some government intervention to create a favorable environment for industries to develop and export. Mercantilism focuses on trade surplus but is more about protectionist policies. The Heckscher - Ohlin theory, theory of comparative advantage, and theory of absolute advantage generally advocate free - trade with less government intervention.

Answer:

e. The new trade theory and theory of national competitive advantage