Irving Kravis International Trade Theory: Postulates, Illustrations and Weaknesses

Abstract

The paper examined Irving Kravis international trade theory. The objective of the study is to x-ray the postulations and the relative importance of Irving Kravis theory in international trade and policy. Thus, Irving Kravis approach to international trade is one of the new trade theories which states that availability or non-availability of goods that governs the pattern of trade. Kravis’ (1956) model averred that, technological innovation is the basis through which trade operates via product availability in that, the availability of goods influences trade through demand and supply forces. According to Kravis (1956), a country produces and exports those commodities available goods which are developed by its entrepreneurs and innovators. By means of explanation, Kravis availability of goods means an elastic supply. Therefore, international trade takes place because of differences in the availability of certain products among countries. Nevertheless, the theory is weak in that, it recognizes that the bases of availability factor are natural resources, technical progress, product differentiation and the government policies, but overlooked consumer preferences in foreign countries as factor that influences trade pattern. Also, the theory is not relevant to trade among advanced nations, this is because advanced nations generally have similar factor endowments and technical know-how.

Keywords: Availability, Entrepreneurs, Kravis, Postulates Technological and Weaknesses.