What theory of international trade

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If you read the theories of absolute/comparative advantage, you would expect that tropical countries will grow and export bananas while temperate countries will grow and export wheat. Similarly, countries with a highly educated work force will export high-tech goods, while a country with a less educated work force will export garments. If this is true, then countries like Germany and France, both with similar climates, workforces, and resources, should not trade with one another. Yet, this is not the case. What theory of international trade might offer an explanation for this phenomenon. How does it explain this?

Reference no: EM131039842

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