The trade theory does not explain the pattern of specialisation
Answers
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Trade theory explains the patterns of trade between countries with reference to the notion of specialization of production and availability of productive resources in respective countries.
Explanation:
Trade theory basically explains the patterns of trade based on specialization of goods and countries in respective countries.For example,a country that is predominantly agricultural or high in agricultural production will use all its available productive resources into agricultural sector and promote export of agricultural commodities and earn revenue in international market.Therefore,the country will specialize in agricultural production and emphasize on setting up a strong export market on the basis of that.
On the other hand,the same country might lack the necessary resources or inputs to produce industrial or manufacturing commodities and hence,not capable of domestically increase the production.Therefore,it might have to import industrial products from other countries,which predominantly specialize in industrial production.
Therefore,this is how pattern of productive specialization can lead to international trade.