Global marketing chapter 2 session 4 moghimi university of georgia

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Global Marketing Chapter 2 Session 4 MOGHIMI University of Georgia

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Global marketing chapter 2 session 4 moghimi university of georgia

  1. 1. B.Moghimi@yahoo.co.uk B.Moghimi@yahoo.co.uk
  2. 2. Chapter 2 Trade Theories and Economic Development Bahman Moghimi (MA, DBA)Bahman Moghimi (MA, DBA) B.Moghimi@yahoo.co.uk
  3. 3. Chapter Outline  Basis for International Trade - Production Possibility Curve - Principle of Absolute Advantage - Principle of Comparative/Relative Advantage  Exchange Ratios, Trade, and Gain  Factor Endowment Theory B.Moghimi@yahoo.co.uk
  4. 4. Chapter Outline  The Competitive Advantage of Nations  A Critical Evaluation of Trade Theories - The Validity of Trade Theories - Limitations and Suggested Refinements  Economic Cooperation - Levels of Economic Integration  Economic and Marketing Implications B.Moghimi@yahoo.co.uk
  5. 5. Basis for International Trade  Principle of Absolute Advantage - a country should export a commodity that can be produced at a lower cost than can other nations - or import a commodity that can only be produced at a higher cost than can other nations B.Moghimi@yahoo.co.uk
  6. 6. Basis for International Trade  Principle of Comparative/Relative Advantage - a country should export either a product with the greatest comparative advantage (or with the least comparative disadvantage) - or import either a product for which it has the greatest comparative disadvantage (or the least comparative advantage) B.Moghimi@yahoo.co.uk
  7. 7. Factor Endowment Theory  Factors of Production - labor - land - capital - others (technology, education, etc.)  inequality of relative prices is a function of regional factor endowments  comparative advantage is determined by relative abundance of such endowments B.Moghimi@yahoo.co.uk
  8. 8. Michael Porter The Competitive Advantage of Nations  Determinants of International Competitiveness - factor conditions - demand conditions - related and supporting industries - firm strategy, structure, and rivalry - chance - government B.Moghimi@yahoo.co.uk
  9. 9. B.Moghimi@yahoo.co.uk Michael Porter The Competitive Advantage of Nations
  10. 10. Validity of Trade Theories  Leontief Paradox – Tendency for countries with similar endowments to trade among themselves  Offshoring  Factor Mobility and Substitution  Demand  Marketing  Trade Barriers B.Moghimi@yahoo.co.uk
  11. 11. Levels of Economic Cooperation  Free Trade Area  Customs Union  Common Market  Economic and Political Union  Political Union B.Moghimi@yahoo.co.uk
  12. 12. Economic Cooperation  Free Trade Area - elimination of internal duties  Customs Union - free trade area + establishment of common barriers  Common Market - customs union + removal of restrictions on movement of production factors B.Moghimi@yahoo.co.uk
  13. 13. Economic Cooperation  Economic and Monetary Union - common market - + harmonization of national economic policies - + one money  Political Union - harmonization of national political policies B.Moghimi@yahoo.co.uk
  14. 14. 16

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