Trade Theory: A Review

The present paper aims to disseminate the validity of trade theories on the ground of the current international trade environment. The research objective consists in the reviewing of the traditional and new trade theories and their explanatory significance regarding the gains from trade issues. Analysis will be conducted in a narrative manner focusing on the principal normative statements and shortcomings arising when every theory is empirically tested. Main findings will show that the essence of the law of comparative advantage and Heckscher-Ohlin theorem generally apply to the new developed theories, passing the empirical test.