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Argues that market is responsible for growth. Demand then supply...economy is based on market based outcomes.
Adam Smith with this theory has its foundations in a "supply creats its own demand" principle. For this reason it emphasizes the monopolistic competition where each nation specializes in ceratain products to benefit greater from the economies of scale. It argues that if industry is restricted to the home market, it will be high cost producer due to size of the market..
2)Comparative advantage is a theory suggested by David Ricardo that International trade should be based on nation's comparative advantages and each country should specialize on their own advantages skills or resources.
3) The problem with this theory is that it sees economic growth as a phased, homogenized and undirectional process. It doesn't consider other parts that can contribute to the development and only see the economy as a progressive process. …
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