Different theories of international business provide insights about favorable locates for exports as well as potentially successful export products. These theories also helps companies determine where to locates their production facilities because in the absence of trade restrictions export of given products will move from lower-cost to higher-cost production location. The theories also increase understanding about government trade policies and predict how these policies might affect companies’ competitiveness.
Some important theories of international business are stated & discussed below:-

1. Mercantilism: Mercantilism is a trade theory that formed the foundation of economic thought from about 1500 to 1800. Mercantilism held that a country’s wealth was measured by its holdings of treasure which usually meant its gold.
According theory, countries should export more than they import and receive gold from countries than run deficits
To export more than they imported government imposed restrictions on most imports and they subsidized production of many products that could otherwise not compete in domestic or export markets. Some countries use their colonial possessions to support this trade objective. Colonial supplied many commodities that the colonizing country might otherwise have had to purchase from a non associated country.
The colonies had to export less highly valued raw materials from engaging and import more highly valued manufactured products. Mercantilist theory was intended to benefit the colonial powers. The imposition of regulations based on this theory caused much discontent in colonies and was one cause of the American Revolution.
Some terminology of the mercantilist era has endured. A favorable balance of trade indicates that a country is exporting more than it is importing. An unfavorable balance of trade indicates the opposite which is