International trade theories

The new international trade theory ignores the differences between countries in terms of resources and focuses on the decisions of entrepreneurs to present an alternative view of the implications of signing the Free Trade Agreement. The new theoryemphasizes the heterogeneity of firms in the importance of productivity and variousfixed costs incurred by companies to produce for the domestic market or international markets. The new models of international trade predict that large firms are the ones that benefit from trade liberalization such as that in the FTA. In contrast to large enterprises, small businesses suffer the onslaught of foreign competition and often have to further reduce its size or close. The closure of small businesses can havehigh social costs in terms of employment, loss of diversity in the economy andweakening of the basis for the generation of new technologies and renewal of the productive apparatus. He should seek a balance between export promotion andprotection of small business. One suggestion that occurs is particularly seek to reducecosts of access to international markets for small businesses.