Which of the following is NOT a reason for the development of modern firm-based theories?
A. The failure of Leontief and other researchers to empirically validate the country-based Heckscher-Ohlin theory.
B. The recognition that countries, not firms, are the agents for international trade.
C. Recognition of the growing importance of MNCs in the postwar international economy.
D. The inability of the country based theories to explain and predict the existence and growth of intra industry trade.
E. Firm-based theories incorporate factors such as quality, technology, brand names, and customer loyalty into explanation of trade flows.
Answer: B