New Trade Theory: The New Trade Theory is based on the idea that trade can be beneficial even in the absence of differences in factor endowments, as there may be economies of scale and network effects that arise from specialization and trade. This theory suggests that countries can benefit from producing a narrow range of goods and services and exporting them to other countries, even if they do not have a comparative advantage in producing those goods and services.

Historical Background of WTO: The World Trade Organization (WTO) was established on January 1, 1995, succeeding the General Agreement on Tariffs and Trade (GATT), which was created in 1947. The GATT was a set of rules and principles that governed international trade, with a focus on reducing trade barriers such as tariffs and quotas.

The creation of the WTO was a response to the changing global economic landscape, including the growing importance of services trade and the need for stronger intellectual property protections. The WTO has 164 member countries and is responsible for administering and enforcing the rules governing international trade. The WTO has played a key role in promoting free trade and economic globalization, while also addressing concerns about the negative effects of trade on certain sectors of the economy and on workers.