Strategic Trade Theory

Strategic Trade Theory suggests that governments can enhance their country's economic position by supporting certain industries to potentially dominate global markets. By providing targeted assistance—like subsidies or favorable policies—countries aim to help domestic firms overcome competitive disadvantages, gain market share, and secure high-value exports. This approach recognizes that international markets are competitive, and strategic interventions can create advantages, especially in industries characterized by high fixed costs and economies of scale. Overall, it emphasizes a proactive, strategic role for governments in shaping competitive outcomes to benefit national economic interests.