Comparative Advantage and Product Life Cycle

There are 2 basic reasons we have trade. Comparative Advantage and Product Life Cycle Theory. You can read about both of these theories in your book on page 95. Here, I'll give you a brief overview plus a couple of videos to help you understand the concepts.

Comparative Advantage

Comparative Advantage is a basic concept of international trade. It means simply that countries should produce the good for which they are best suited to produce. Here is a good explanation from Investopedia. 

Product Life Cycle Theory

The product life cycle theory suggests that exports happen when a product hads reached the maturity stage of development within a home market. Once the market has been saturated, the product wil then begin growth overseas. Here's a short video explaining the different stages of a product life cycle.

So which of these theories do you think works best. Could you think of a sample of each?