The document provides an overview of several theories of international trade, including: 1) Mercantilism holds that a nation's wealth depends on trade surpluses and advocates maximizing exports and minimizing imports. 2) Absolute advantage theory proposes that countries should specialize in goods they can produce most efficiently. 3) Comparative advantage theory extends this to argue that trade benefits both parties even if one country is more efficient in all areas. 4) Heckscher-Ohlin theory states that countries will export goods that rely on their abundant factors of production and import goods that rely on scarce factors.

1. International Trade Theory Chapter 4