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country similarity theory

John O'Connell


The conduct of trade is dependent upon there being a supply of goods and services and a corresponding demand for those (or similar) goods and services. The country similarity theory states that countries having the most similarities with one another (degree of industrialization, per capita incomes, savings habits, communications and transportation systems, degree of technology, language, etc.) will be the most likely to trade with one another. This rather logical theory is based upon the premise that similar countries will be interested in similar goods and services. Not a devastatingly scientific theory, it is one which at least points to specific countries as being good candidates for a company's first foray into international trade. It ignores opportunities in developing economies as well. ... log in or subscribe to read full text

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