This document provides an overview of global economic environment and international competition. It discusses various international trade theories such as absolute advantage, comparative advantage, and Porter's Diamond model of national competitive advantage. The theories explore factors that determine a country's trade patterns and competitive strengths in global trade, including factor endowments, demand conditions, related/supporting industries, and firm strategy/rivalry. The presentation aims to analyze the underlying factors contributing to competitive success in international markets and how nations can develop globally competitive industries.
This chapter discusses various theories of international trade and factor mobility. It begins by explaining theories of absolute advantage and comparative advantage which argue that free trade allows countries to specialize in areas where they have a cost advantage. Later sections cover theories that explain patterns of trade based on country size, factor endowments, and country similarity. The chapter also discusses interventionist theories and the relationship between trade and the international movement of labor and capital.
This document provides an overview of theories related to international trade and factor mobility. It discusses theories that support both laissez-faire and interventionist approaches to trade. Specifically, it covers theories of absolute advantage, comparative advantage, factor proportions, product life cycles, and the relationship between trade and international mobility of production factors like labor and capital. The goal is for students to understand different frameworks for analyzing international trade patterns, factors that influence countries' export capabilities, and why production resources move globally.
IAF605 Week 5 International trade and factor mobility theoryIAF605
The document summarizes key points from Chapter 6 of the textbook on international trade and factor mobility theory. It discusses major theories such as absolute advantage, comparative advantage, factor proportions theory, country similarity theory, and product life cycle theory. It also explains how trade patterns are influenced by country characteristics and how trade and mobility of factors like capital and labor are interconnected on a global scale. Looking ahead, it predicts shifts in trade as economies develop and production becomes more specialized and services-oriented.
The document discusses Michael Porter's Diamond Model, which analyzes the competitive advantages of nations and industries. The model identifies four key attributes that determine national advantage: factor conditions, related and supporting industries, demand conditions, and firm strategy/rivalry. It provides an example analysis of the mobile telecommunications industry using the Diamond Model framework. The model can help organizations identify national-level factors that build advantages and inform internationalization strategies.
06 International Trade and Factor MobilityBrent Weeks
To understand theories of international trade
To explain how free trade improves global efficiency
To identify factors affecting national trade patterns
To explain why a country’s export capabilities are dynamic
To understand why production factors, especially labor and capital, move internationally
To explain the relationship between foreign trade and international factor mobility
The document summarizes several theories of international trade:
- It describes mercantilism and identifies its inherent flaws in assuming trade is zero-sum and constraining production.
- Absolute and comparative advantage theories are explained, showing how specialization allows nations to produce more.
- Factor proportions theory links a nation's exports to its abundant resources and imports to scarce resources.
- International product life cycle theory ties a product's exports and investment over its lifetime.
- New trade theories examine increasing returns to scale, first-mover advantages, and national competitive advantage from clusters of related industries.
This document outlines and compares the trade policies of Australia's major political parties - Labor, the Coalition, and the Greens. Labor emphasizes sharing the benefits of trade liberalization domestically and internationally, while also providing short-term support for workers and sectors adjusting to trade. The Coalition focuses on increasing exports through fast-tracking free trade agreements in Asia to increase foreign investment. The Greens prioritize fairness and democracy in trade and assisting developing countries. The parties differ in their stances on issues like labor rights, healthcare, intellectual property and more. Implications of each party winning the election are discussed.
Michael Porter's theory of national competitive advantage outlines four key factors that influence a nation's competitiveness: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry. Porter's diamond framework evaluates how these four factors interact to determine a nation's ability to participate competitively in international markets. Factor conditions include a nation's resources and infrastructure. Demand conditions refer to domestic demand for products and services. Related and supporting industries promote innovation when competitive industries prosper. Firm strategy and rivalry spur improvement and innovation through cultural differences and competition between companies.
This chapter discusses various theories of international trade and factor mobility. It begins by explaining theories of absolute advantage and comparative advantage which argue that free trade allows countries to specialize in areas where they have a cost advantage. Later sections cover theories that explain patterns of trade based on country size, factor endowments, and country similarity. The chapter also discusses interventionist theories and the relationship between trade and the international movement of labor and capital.
This document provides an overview of theories related to international trade and factor mobility. It discusses theories that support both laissez-faire and interventionist approaches to trade. Specifically, it covers theories of absolute advantage, comparative advantage, factor proportions, product life cycles, and the relationship between trade and international mobility of production factors like labor and capital. The goal is for students to understand different frameworks for analyzing international trade patterns, factors that influence countries' export capabilities, and why production resources move globally.
IAF605 Week 5 International trade and factor mobility theoryIAF605
The document summarizes key points from Chapter 6 of the textbook on international trade and factor mobility theory. It discusses major theories such as absolute advantage, comparative advantage, factor proportions theory, country similarity theory, and product life cycle theory. It also explains how trade patterns are influenced by country characteristics and how trade and mobility of factors like capital and labor are interconnected on a global scale. Looking ahead, it predicts shifts in trade as economies develop and production becomes more specialized and services-oriented.
The document discusses Michael Porter's Diamond Model, which analyzes the competitive advantages of nations and industries. The model identifies four key attributes that determine national advantage: factor conditions, related and supporting industries, demand conditions, and firm strategy/rivalry. It provides an example analysis of the mobile telecommunications industry using the Diamond Model framework. The model can help organizations identify national-level factors that build advantages and inform internationalization strategies.
06 International Trade and Factor MobilityBrent Weeks
To understand theories of international trade
To explain how free trade improves global efficiency
To identify factors affecting national trade patterns
To explain why a country’s export capabilities are dynamic
To understand why production factors, especially labor and capital, move internationally
To explain the relationship between foreign trade and international factor mobility
The document summarizes several theories of international trade:
- It describes mercantilism and identifies its inherent flaws in assuming trade is zero-sum and constraining production.
- Absolute and comparative advantage theories are explained, showing how specialization allows nations to produce more.
- Factor proportions theory links a nation's exports to its abundant resources and imports to scarce resources.
- International product life cycle theory ties a product's exports and investment over its lifetime.
- New trade theories examine increasing returns to scale, first-mover advantages, and national competitive advantage from clusters of related industries.
This document outlines and compares the trade policies of Australia's major political parties - Labor, the Coalition, and the Greens. Labor emphasizes sharing the benefits of trade liberalization domestically and internationally, while also providing short-term support for workers and sectors adjusting to trade. The Coalition focuses on increasing exports through fast-tracking free trade agreements in Asia to increase foreign investment. The Greens prioritize fairness and democracy in trade and assisting developing countries. The parties differ in their stances on issues like labor rights, healthcare, intellectual property and more. Implications of each party winning the election are discussed.
Michael Porter's theory of national competitive advantage outlines four key factors that influence a nation's competitiveness: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry. Porter's diamond framework evaluates how these four factors interact to determine a nation's ability to participate competitively in international markets. Factor conditions include a nation's resources and infrastructure. Demand conditions refer to domestic demand for products and services. Related and supporting industries promote innovation when competitive industries prosper. Firm strategy and rivalry spur improvement and innovation through cultural differences and competition between companies.
This document provides an outline for a chapter that discusses international trade and factor mobility theory. It begins with an opening case study on Costa Rica's economic transformation through international trade and foreign investment policies. The chapter then covers various trade theories including mercantilism, absolute advantage, comparative advantage, and theories explaining trade patterns based on country size, factor proportions, and country similarity. It also discusses how the location of production shifts over the product lifecycle and how national competitive advantages can develop and change. In concluding, the chapter discusses the relationship between international trade and the mobility of production factors like labor and capital.
The document provides an overview of strategic concepts including definitions of strategy, creating value, capturing value, and reasons for going international. It then discusses location choice as part of strategy and broad categories of strategies such as exporting, multidomestic, global, branching, and outsourcing. Specific issues related to costs such as labor costs, communication costs, border costs, and economies of scale are also examined in determining optimal location strategies.
International Trade Theory and Policy: A Review of the Literature*nazirali423
This document summarizes a working paper that reviews international trade theory literature from classical theories of comparative advantage to modern new trade theories. It discusses early theories from Adam Smith and David Ricardo, then covers neoclassical theories incorporating demand and resource endowments. It also summarizes newer theories incorporating increasing returns to scale, imperfect competition, and strategic trade policies. The paper aims to provide context around the evolution of trade theories and critiques of different approaches.
This is a project that I worked on with a group for my "Marketing Strategy" module in my masters of International Marketing and Communications. The main focus is on the process of internationalizing companies. This report answers the following questions:
- Is it necessary to go international?
- What are influential factors for internationalizing?
Ibm unit 2 international trade and investmentGanesha Pandian
This document provides an overview of international trade and investment topics. It discusses the role of organizations like the WTO and GATT in promoting global trade. It covers various trade theories like comparative advantage and the Heckscher-Ohlin model. The document also examines foreign direct investment, factors influencing FDI, and India's FDI policy. Additionally, it defines regional trade blocks and provides examples of major trade blocks like the EU, NAFTA, and ASEAN.
The competitive development of nationa economiesara19
The document discusses Porter's framework for analyzing national competitive advantage and economic development. It presents Porter's theory that a nation's competitive advantage is determined by factor conditions, demand conditions, related and supporting industries, and firm strategy/rivalry. It provides examples of how Porter's framework applies to analyzing the economies of countries like Saudi Arabia, Finland, and Lebanon at different stages of development.
This document provides an overview of key concepts related to global business management including production, marketing, finance, and human resources. It discusses factors in selecting global production locations, scales of operations, make-or-buy decisions, global supply chain management, international marketing strategies, product development challenges, pricing strategies, and international human resource management challenges. Key aspects of international financial management are also summarized such as country risk analysis, sources of funds, and managing foreign exchange rate risk.
This document discusses various theories of international trade and investment. It covers theories such as mercantilism, absolute advantage, comparative advantage, factor endowments, and newer theories like product life cycles and clusters. It also discusses arguments for and types of trade restrictions, including tariffs and nontariff barriers. Finally, it outlines several theories of foreign direct investment, such as monopolistic advantages and internalization to explain why firms invest overseas.
This document discusses reasons for and benefits of international business from individual and government perspectives, including managing product lifecycles, geographic expansion, trade theories, corporate ambition, and earning foreign exchange. Key benefits are new markets, access to resources, economic efficiency, and employment. Risks and challenges are also outlined, such as high initial costs, strict trade laws, quality issues, political and legal risks, cultural differences, foreign politics, exchange rate fluctuations, and environmental factors. Overall, the document provides an introduction to international business by outlining motivations, advantages, and issues to consider.
This document discusses various economic theories of international trade and foreign direct investment (FDI). It covers theories such as mercantilism, free trade, comparative advantage, competitive advantage, Porter's Diamond model of national competitive advantage, industrial policy, and Dunning's Eclectic Paradigm of FDI. Key points covered include factors that give nations comparative advantages, Michael Porter's four determinants of national competitive advantage, examples of governments using industrial policy to support economic development, and the three conditions in Dunning's Eclectic Paradigm that determine whether a firm engages in FDI.
Business environment 1 st module mba Management Babasab Patil
This document provides an overview of business environment. It discusses the nature of modern business including factors like large size, oligopolistic character, diversification, global reach, technological orientation, and government control. It also covers internal factors like goals, management structure, and resources as well as external factors including the economic, political, legal, and socio-cultural environment. Environmental scanning is introduced as the process of monitoring changes in the external environment to facilitate decision making.
The theory of national competitive advantage attempts to analyze why nations succeed in certain industries. Porter studied industries in different nations and postulated that competitive advantage is determined by factor endowments, demand conditions, related/supporting industries, and firm strategy/rivalry. These attributes reinforce each other in a "diamond" relationship. A nation's basic resources and investments in advanced factors like skills, technology, and education impact competitive advantage. Sophisticated domestic demand drives quality and innovation. Clusters of supporting industries also contribute to success. Long-term vision and domestic rivalry improve competitiveness. Porter's theory predicts trade patterns based on the strength of these diamond attributes in different nations and industries.
This document provides an overview of conflict management and ethics in international business management. It discusses sources of conflict in international business, including political, economic, and cultural differences between countries. It also addresses conflict resolution strategies like negotiation and the roles of international organizations in mediating disputes. Finally, it examines key ethical issues that multinational companies may face regarding practices like employment, human rights, and corruption. Managers must consider ethics in decision-making and cultivate an ethical culture and leadership to guide responsible business conduct globally.
This document discusses globalization and international strategy. It defines globalization and discusses its levels, features, drivers, approaches, stages, benefits, and ill effects. It also discusses globalization policy suggestions from the UNDP, India's strengths and challenges for globalization, and entry strategies for international business. The document is a lecture on globalization and international strategy presented by Prof. S P Das.
The document discusses international strategy and provides frameworks for assessing internationalization potential, sources of competitive advantage, types of international strategies, market selection, entry modes, performance impacts, and subsidiary roles. Key factors in internationalization include drivers of globalization, Porter's Diamond model of national advantages, and the four main international strategies. Markets should be evaluated based on attractiveness, distance, and retaliation risk. Common entry modes are exporting, licensing, joint ventures, and foreign direct investment. Internationalization may follow an inverted U-shape performance relationship.
The document provides an overview of international business, including:
- Benefits of international business like access to larger markets, cheaper labor, and increased quality/quantity of goods
- The five Ps of international business: product, price, proximity, preference, and promotion
- Potential costs like outsourcing, human rights issues, and environmental degradation
- Barriers to international trade such as tariffs and non-tariff barriers
- Canada's major trading partners and trade agreements
- The future of international trade bodies and increasing globalization and cultural integration.
This document discusses international trade and investment. It covers several topics:
1. The need for global trade including factors like large-scale production, self-sufficiency, transportation, and compensating for differences in production.
2. Components of international trade and investment such as trade in goods and services, foreign direct investment, portfolio investments, and other types of investments.
3. Promotion of global business including the promotion process and various promotional tools used internationally like advertising, sales promotions, public relations, and branding.
This document provides an overview of various trade theories:
1. It begins with explaining mercantilism theory, which held that a country's power depended on its wealth and advocated increasing exports and restricting imports.
2. It then discusses absolute advantage theory and comparative advantage theory, which argue that countries should specialize in producing goods where they have a relative cost advantage and trade for other goods.
3. Factor endowment theory and Hecksher-Ohlin theory posit that countries will export goods that intensively use their abundant and cheap domestic factors of production.
4. More recent theories discussed include product life cycle theory, new trade theory, and Porter's diamond model, which analyze factors like technology,
International trade theories aim to explain why trade occurs between countries. Classical theories from the 18th-19th centuries focused on advantages at a country level, such as absolute advantage based on production efficiency or comparative advantage based on opportunity costs. Modern theories from the 20th century examine advantages at a firm level, such as country similarity theory that intraindustry trade increases between countries with similar consumer preferences and incomes. Overall, international trade is complex and cannot be fully explained by a single theory, as our understanding continues to evolve with globalization.
Porter's theory of national competitive advantage argues that a nation provides the "home base" that allows firms to gain advantages. The theory identifies four determinants of competitive advantage: factor conditions, demand conditions, related and supporting industries, and firm strategy/rivalry. Government policy can influence competitiveness by supporting investment, innovation, and high domestic rivalry rather than protecting industries. Competitive advantage is dynamic and requires continuous upgrading and innovation to withstand erosion over time.
The document discusses several theories of international trade:
1. Mercantilism held that a nation's wealth depended on accumulating gold and silver through trade surpluses. It advocated subsidies for exports and tariffs/quotas on imports.
2. Adam Smith's absolute advantage theory argued that countries should specialize in goods they produce most efficiently and trade for other goods. Both countries can benefit through specialization and trade.
3. David Ricardo's comparative advantage theory extended this, showing that trade can benefit both sides even if one country is more efficient overall. Countries should import goods they have a comparative - not absolute - disadvantage in.
4. Later theories examined factors like differences in factor endowments
The document provides an overview of several theories of international trade, including:
1) Mercantilism which holds that nations should accumulate wealth through trade surpluses and restricting imports.
2) Absolute advantage theory proposed by Adam Smith which argues that countries should specialize in goods they produce most efficiently.
3) Comparative advantage theory of David Ricardo which extends this to argue for importing even if less efficient in production to maximize efficiency.
4) Product life cycle theory which proposes that products move through stages from export to foreign investment as they mature.
This document provides an outline for a chapter that discusses international trade and factor mobility theory. It begins with an opening case study on Costa Rica's economic transformation through international trade and foreign investment policies. The chapter then covers various trade theories including mercantilism, absolute advantage, comparative advantage, and theories explaining trade patterns based on country size, factor proportions, and country similarity. It also discusses how the location of production shifts over the product lifecycle and how national competitive advantages can develop and change. In concluding, the chapter discusses the relationship between international trade and the mobility of production factors like labor and capital.
The document provides an overview of strategic concepts including definitions of strategy, creating value, capturing value, and reasons for going international. It then discusses location choice as part of strategy and broad categories of strategies such as exporting, multidomestic, global, branching, and outsourcing. Specific issues related to costs such as labor costs, communication costs, border costs, and economies of scale are also examined in determining optimal location strategies.
International Trade Theory and Policy: A Review of the Literature*nazirali423
This document summarizes a working paper that reviews international trade theory literature from classical theories of comparative advantage to modern new trade theories. It discusses early theories from Adam Smith and David Ricardo, then covers neoclassical theories incorporating demand and resource endowments. It also summarizes newer theories incorporating increasing returns to scale, imperfect competition, and strategic trade policies. The paper aims to provide context around the evolution of trade theories and critiques of different approaches.
This is a project that I worked on with a group for my "Marketing Strategy" module in my masters of International Marketing and Communications. The main focus is on the process of internationalizing companies. This report answers the following questions:
- Is it necessary to go international?
- What are influential factors for internationalizing?
Ibm unit 2 international trade and investmentGanesha Pandian
This document provides an overview of international trade and investment topics. It discusses the role of organizations like the WTO and GATT in promoting global trade. It covers various trade theories like comparative advantage and the Heckscher-Ohlin model. The document also examines foreign direct investment, factors influencing FDI, and India's FDI policy. Additionally, it defines regional trade blocks and provides examples of major trade blocks like the EU, NAFTA, and ASEAN.
The competitive development of nationa economiesara19
The document discusses Porter's framework for analyzing national competitive advantage and economic development. It presents Porter's theory that a nation's competitive advantage is determined by factor conditions, demand conditions, related and supporting industries, and firm strategy/rivalry. It provides examples of how Porter's framework applies to analyzing the economies of countries like Saudi Arabia, Finland, and Lebanon at different stages of development.
This document provides an overview of key concepts related to global business management including production, marketing, finance, and human resources. It discusses factors in selecting global production locations, scales of operations, make-or-buy decisions, global supply chain management, international marketing strategies, product development challenges, pricing strategies, and international human resource management challenges. Key aspects of international financial management are also summarized such as country risk analysis, sources of funds, and managing foreign exchange rate risk.
This document discusses various theories of international trade and investment. It covers theories such as mercantilism, absolute advantage, comparative advantage, factor endowments, and newer theories like product life cycles and clusters. It also discusses arguments for and types of trade restrictions, including tariffs and nontariff barriers. Finally, it outlines several theories of foreign direct investment, such as monopolistic advantages and internalization to explain why firms invest overseas.
This document discusses reasons for and benefits of international business from individual and government perspectives, including managing product lifecycles, geographic expansion, trade theories, corporate ambition, and earning foreign exchange. Key benefits are new markets, access to resources, economic efficiency, and employment. Risks and challenges are also outlined, such as high initial costs, strict trade laws, quality issues, political and legal risks, cultural differences, foreign politics, exchange rate fluctuations, and environmental factors. Overall, the document provides an introduction to international business by outlining motivations, advantages, and issues to consider.
This document discusses various economic theories of international trade and foreign direct investment (FDI). It covers theories such as mercantilism, free trade, comparative advantage, competitive advantage, Porter's Diamond model of national competitive advantage, industrial policy, and Dunning's Eclectic Paradigm of FDI. Key points covered include factors that give nations comparative advantages, Michael Porter's four determinants of national competitive advantage, examples of governments using industrial policy to support economic development, and the three conditions in Dunning's Eclectic Paradigm that determine whether a firm engages in FDI.
Business environment 1 st module mba Management Babasab Patil
This document provides an overview of business environment. It discusses the nature of modern business including factors like large size, oligopolistic character, diversification, global reach, technological orientation, and government control. It also covers internal factors like goals, management structure, and resources as well as external factors including the economic, political, legal, and socio-cultural environment. Environmental scanning is introduced as the process of monitoring changes in the external environment to facilitate decision making.
The theory of national competitive advantage attempts to analyze why nations succeed in certain industries. Porter studied industries in different nations and postulated that competitive advantage is determined by factor endowments, demand conditions, related/supporting industries, and firm strategy/rivalry. These attributes reinforce each other in a "diamond" relationship. A nation's basic resources and investments in advanced factors like skills, technology, and education impact competitive advantage. Sophisticated domestic demand drives quality and innovation. Clusters of supporting industries also contribute to success. Long-term vision and domestic rivalry improve competitiveness. Porter's theory predicts trade patterns based on the strength of these diamond attributes in different nations and industries.
This document provides an overview of conflict management and ethics in international business management. It discusses sources of conflict in international business, including political, economic, and cultural differences between countries. It also addresses conflict resolution strategies like negotiation and the roles of international organizations in mediating disputes. Finally, it examines key ethical issues that multinational companies may face regarding practices like employment, human rights, and corruption. Managers must consider ethics in decision-making and cultivate an ethical culture and leadership to guide responsible business conduct globally.
This document discusses globalization and international strategy. It defines globalization and discusses its levels, features, drivers, approaches, stages, benefits, and ill effects. It also discusses globalization policy suggestions from the UNDP, India's strengths and challenges for globalization, and entry strategies for international business. The document is a lecture on globalization and international strategy presented by Prof. S P Das.
The document discusses international strategy and provides frameworks for assessing internationalization potential, sources of competitive advantage, types of international strategies, market selection, entry modes, performance impacts, and subsidiary roles. Key factors in internationalization include drivers of globalization, Porter's Diamond model of national advantages, and the four main international strategies. Markets should be evaluated based on attractiveness, distance, and retaliation risk. Common entry modes are exporting, licensing, joint ventures, and foreign direct investment. Internationalization may follow an inverted U-shape performance relationship.
The document provides an overview of international business, including:
- Benefits of international business like access to larger markets, cheaper labor, and increased quality/quantity of goods
- The five Ps of international business: product, price, proximity, preference, and promotion
- Potential costs like outsourcing, human rights issues, and environmental degradation
- Barriers to international trade such as tariffs and non-tariff barriers
- Canada's major trading partners and trade agreements
- The future of international trade bodies and increasing globalization and cultural integration.
This document discusses international trade and investment. It covers several topics:
1. The need for global trade including factors like large-scale production, self-sufficiency, transportation, and compensating for differences in production.
2. Components of international trade and investment such as trade in goods and services, foreign direct investment, portfolio investments, and other types of investments.
3. Promotion of global business including the promotion process and various promotional tools used internationally like advertising, sales promotions, public relations, and branding.
This document provides an overview of various trade theories:
1. It begins with explaining mercantilism theory, which held that a country's power depended on its wealth and advocated increasing exports and restricting imports.
2. It then discusses absolute advantage theory and comparative advantage theory, which argue that countries should specialize in producing goods where they have a relative cost advantage and trade for other goods.
3. Factor endowment theory and Hecksher-Ohlin theory posit that countries will export goods that intensively use their abundant and cheap domestic factors of production.
4. More recent theories discussed include product life cycle theory, new trade theory, and Porter's diamond model, which analyze factors like technology,
International trade theories aim to explain why trade occurs between countries. Classical theories from the 18th-19th centuries focused on advantages at a country level, such as absolute advantage based on production efficiency or comparative advantage based on opportunity costs. Modern theories from the 20th century examine advantages at a firm level, such as country similarity theory that intraindustry trade increases between countries with similar consumer preferences and incomes. Overall, international trade is complex and cannot be fully explained by a single theory, as our understanding continues to evolve with globalization.
Porter's theory of national competitive advantage argues that a nation provides the "home base" that allows firms to gain advantages. The theory identifies four determinants of competitive advantage: factor conditions, demand conditions, related and supporting industries, and firm strategy/rivalry. Government policy can influence competitiveness by supporting investment, innovation, and high domestic rivalry rather than protecting industries. Competitive advantage is dynamic and requires continuous upgrading and innovation to withstand erosion over time.
The document discusses several theories of international trade:
1. Mercantilism held that a nation's wealth depended on accumulating gold and silver through trade surpluses. It advocated subsidies for exports and tariffs/quotas on imports.
2. Adam Smith's absolute advantage theory argued that countries should specialize in goods they produce most efficiently and trade for other goods. Both countries can benefit through specialization and trade.
3. David Ricardo's comparative advantage theory extended this, showing that trade can benefit both sides even if one country is more efficient overall. Countries should import goods they have a comparative - not absolute - disadvantage in.
4. Later theories examined factors like differences in factor endowments
The document provides an overview of several theories of international trade, including:
1) Mercantilism which holds that nations should accumulate wealth through trade surpluses and restricting imports.
2) Absolute advantage theory proposed by Adam Smith which argues that countries should specialize in goods they produce most efficiently.
3) Comparative advantage theory of David Ricardo which extends this to argue for importing even if less efficient in production to maximize efficiency.
4) Product life cycle theory which proposes that products move through stages from export to foreign investment as they mature.
This chapter discusses globalization and multinational enterprises. It defines a multinational enterprise as a company with subsidiaries or affiliates in foreign countries. It also discusses theories of comparative advantage and how countries and firms specialize in areas where they have a relative production advantage. Market imperfections provide opportunities for multinational firms to exploit economies of scale, expertise, and financial strength across borders. Strategic motives for foreign direct investment include seeking new markets, resources, production efficiencies, and political stability.
The document outlines several theories of international trade including:
1. Mercantilism focused on accumulation of wealth through government-controlled trade. Classical theories introduced concepts of absolute and comparative advantage showing how trade benefits nations.
2. Factor proportions theory argues countries will specialize in exports of goods intensive in their abundant factors of production.
3. Product cycle theory explains trade through stages of a product's life cycle and how production shifts internationally.
4. New trade theory recognizes markets are imperfectly competitive and governments can strategically influence trade in areas of scale economies, costs, network effects, and externalities.
The document outlines several theories of international trade including:
1. Mercantilism focused on accumulation of wealth through government-controlled trade. Classical theories included absolute and comparative advantage showing benefits of specialization and trade.
2. Factor proportions theory argues countries should specialize in exports of goods intensive in their abundant factors of production.
3. Product cycle theory examines how products and manufacturing methods mature through innovation, mass production, and standardization, and how this impacts trade and investment.
4. New trade theory recognizes markets are imperfectly competitive and governments can strategically influence trade in areas of scale economies, costs, network effects, and externalities.
The document discusses strategies and organizational structures of multinational corporations operating across international markets. It covers topics such as the impact of internationalization on industry structure and competition, frameworks for analyzing competitive advantage in an international context, and how national influences can shape competitiveness. It also examines the evolution of multinational strategies from early decentralized structures to more centralized and integrated approaches.
The document discusses strategies for multinational corporations operating internationally. It covers topics such as the international location of production, modes of foreign market entry, implications of internationalization on industry analysis, and developing competitive advantage within an international context. National influences on competitiveness are also examined.
This document provides an overview of theories of international trade, beginning with mercantilism and including absolute advantage, comparative advantage, factor proportions, product life cycles, new trade theory, and national competitive advantage. It discusses key aspects of each theory, such as how mercantilism aimed to accumulate wealth through trade surpluses while exploiting colonies, and how comparative advantage shows that trade benefits both parties even if one country is less efficient. Theories have evolved over time to better explain patterns of trade.
This document summarizes several theories of international trade:
- Mercantilism focused on accumulating wealth through government-regulated trade.
- Classical theories by Adam Smith and David Ricardo established that countries benefit from specializing in what they have a comparative advantage in and trading.
- Factor proportions theory says countries will export goods that intensively use their abundant factors of production.
- Product cycle theory explains trade through the stages of a product's life cycle and companies' production moving internationally.
- New trade theory examines how scale economies and imperfect competition affect patterns of trade.
Globalization refers to the changes in the world where we are moving away from self-contained countries and toward a more integrated world. Globalization of business is the change in a business from a company associated with a single country to one that operates in multiple countries.
The document discusses several factors that have contributed to the flattening of the world and increased globalization, according to Thomas Friedman. These include the fall of the Berlin Wall, the rise of the internet and web browsers, and the emergence of workflow software, which created online platforms for increased collaboration globally. Subsequent factors discussed are uploading, outsourcing, offshoring, supply-chaining, insourcing, and informing, which represent new forms of global collaboration enabled by technological advances. The document also discusses implications for international business and theories of internationalization.
New Trade Theory and Competitive Advantage Theory BhutheshRS
This document discusses international business and international trade theories, including the New Trade Theory and Porter's Diamond Model of national competitive advantage. The New Trade Theory focuses on increasing returns to scale and network effects. It assumes imperfect competition and economies of scale. Porter's Diamond Model identifies four determinants of national competitive advantage: factor conditions, firm strategy/rivalry, related/supporting industries, and demand conditions. Together these theories aim to explain patterns of international trade and sources of national success in global markets.
Senior Seminar in Business AdministrationBUS499 Strategic Ma.docxklinda1
Senior Seminar in Business Administration
BUS499
Strategic Management and Strategic Competitiveness
Welcome to the Government Contract Law.
In this lesson we will discuss Strategic Management and Strategic Competitiveness.
Please go to the next slide.
Objectives
Upon completion of this lesson, you will be able to:
Identify the vision, mission, and stakeholders of a firm
When you complete this lesson you will be able to:
Identify the vision, mission, and stakeholders of a firm.
Please go to the next slide.
Supporting Topics
The Competitive Landscape
The I/O Model of Above Average-Returns
The Resource-Based Model of Above Average-Returns
Vision and Mission
Stakeholders
Strategic Leaders
The Strategic Management Process
In order to achieve this objective, the following supporting topics will be covered:
The competitive landscape;
The I/O model of above average-returns;
The resource-based model of above average-returns;
Vision and mission;
Stakeholders;
Strategic leaders; and
The strategic management process.
Please go to the next slide.
The Competitive Landscape
Competition is Changing
Money is scare
Markets are becoming volatile
Firms effectively using the strategic management process
Hypercompetition
Challenge competitors
Competition between many of the world’s industries is changing. Many of these industries are competing due to money being scare and markets becoming volatile. Boundaries that once seemed drawn between industries are becoming blurred. An example of this challenge would be the advances in interactive computer networks and telecommunications. These advancements have entered into the realm of the entertainment industry. We also see that many partnerships in the entertainment industry further blur the boundaries of the industry. In order to be successful and maintain a competitive edge, managers must adopt new strategies to stay current with the evolving conditions.
Many firms effectively use the strategic management process to help reduce the likelihood of failure with various challenges they may encounter.
Hypercompetition is a term often used to illustrate the competitive landscape. The conditions of hypercompetition assume that market stability is replaced by notions of inherent instability and change.
Hypercompetition results from the dynamics of strategic maneuvering among global and innovative combatants. It is a condition of rapidly escalating competition based on the following:
Price quality positioning;
Competition to create new know-how and establish first mover advantage; and
Competition to protect or invade established product or geographic markets.
In a hypercompetitive market, firms will want to challenge their competitors with the end goal of improving their competitive position and performance. The emergence of a global economy and technology along with specifically rapid technological changes are the two primary elements of hypercompetitive environments and help create to.
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Each framework is presented with visually engaging diagrams and templates, ensuring the content is both informative and appealing. While this compilation is thorough, please note that the slides are intended as supplementary resources and may not be sufficient for standalone instructional purposes.
This compilation is ideal for anyone looking to enhance their understanding of innovation management and drive meaningful change within their organization. Whether you aim to improve product development processes, enhance customer experiences, or drive digital transformation, these frameworks offer valuable insights and tools to help you achieve your goals.
INCLUDED FRAMEWORKS/MODELS:
1. Stanford’s Design Thinking
2. IDEO’s Human-Centered Design
3. Strategyzer’s Business Model Innovation
4. Lean Startup Methodology
5. Agile Innovation Framework
6. Doblin’s Ten Types of Innovation
7. McKinsey’s Three Horizons of Growth
8. Customer Journey Map
9. Christensen’s Disruptive Innovation Theory
10. Blue Ocean Strategy
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13. The Double Diamond
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16. Edward de Bono’s Six Thinking Hats
17. Stage-Gate Model
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19. Microsoft’s Digital Transformation Framework
20. Design for Six Sigma (DFSS)
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This presentation is a curated compilation of PowerPoint diagrams and templates designed to illustrate 20 different digital transformation frameworks and models. These frameworks are based on recent industry trends and best practices, ensuring that the content remains relevant and up-to-date.
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These materials are perfect for enhancing your business or classroom presentations, offering visual aids to supplement your insights. Please note that while comprehensive, these slides are intended as supplementary resources and may not be complete for standalone instructional purposes.
Frameworks/Models included:
Microsoft’s Digital Transformation Framework
McKinsey’s Ten Guiding Principles of Digital Transformation
Forrester’s Digital Transformation Framework
IDC’s Digital Transformation MaturityScape
MIT’s Digital Transformation Framework
Gartner’s Digital Transformation Framework
Accenture’s Digital Strategy & Enterprise Frameworks
Deloitte’s Digital Industrial Transformation Framework
Capgemini’s Digital Transformation Framework
PwC’s Digital Transformation Framework
Cisco’s Digital Transformation Framework
Cognizant’s Digital Transformation Framework
DXC Technology’s Digital Transformation Framework
The BCG Strategy Palette
McKinsey’s Digital Transformation Framework
Digital Transformation Compass
Four Levels of Digital Maturity
Design Thinking Framework
Business Model Canvas
Customer Journey Map
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1. Go Global !
Global Economic Environment :
International Competition
By
Stephen Ong
Edinburgh Napier University Business School
chong@mail.tarc.edu.my
Visiting Professor, College of Management, Shenzhen
University
12 August 2012
2. Agenda
1. International
trade theories
2. Competitive
advantage of
nations
3. Porter’s
Diamond
3. Learning Objectives
To discuss the
underlying factors
which contribute to
competitive success in
international markets.
To analyse the basis
for national
competitive
advantages in
establishing specific
globally competitive
industries.
4. Laissez-Faire vs. Intervention
Trade theory helps answer
What products should we import and export?
How much should we trade?
With whom should we trade?
Laissez-faire approach
Free trade theories – absolute advantage and
comparative advantage
Intervention approach
Mercantilism and neomercantilism
10. Mercantilism
Mercantilism countries should export more
than they import
Maintain a favourable balance of trade
trade surplus
Avoid an unfavourable balance of trade
trade deficit
12. Free Trade Theories
Two theories that
support free trade
Absolute advantage
theory
Comparative advantage
theory
Market forces should
determine trade
specialization
13. Theory of Absolute Advantage
Theory of absolute advantage
different countries produce some goods more efficiently than others
Free trade brings
Specialization
natural advantage
acquired advantage
product technology
process technology
Greater efficiency
Higher global output
14. Theory of Absolute Advantage
Production Possibilities under Conditions of Absolute
Advantage
15. Theory of Comparative Advantage
Theory of comparative advantage
free trade can increase global output even
if one country has an absolute advantage
in the production of all products
Consider
comparative advantage
absolute disadvantage
16. Theory of Comparative Advantage
Production Possibilities under Conditions of Comparative
Advantage
17. Theories of Specialization:
Assumptions and Limitations
Theories of specialization make assumptions that may
not be valid
full employment
economic efficiency
division of gains
two countries, two commodities
transport costs
statics and dynamics
services
production networks
mobility
18. How Much Does A Country
Trade?
Theory of country size
large countries depend less on trade than
small countries
Large countries usually
export a smaller portion of output and import
a smaller part of consumption
have higher transportation costs for foreign
trade
19. What Does A Country Trade?
Factor proportions theory
factors in relative abundance are cheaper
than factors that are relatively scarce
But
production factors are not homogenous
labour
Process technology
capital versus labour
20. What Does A Country Trade?
Worldwide Trade by Major Sectors
21. Choosing Trading Partners
Country similarity theory
most trade occurs among developed countries
share similar market
characteristics
produce and consume much more
than developing countries
Trading partners are affected by
Cultural similarity
Political relations between countries
Distance
22. Product Life-Cycle Theory
Raymond Vernon 1966
Optimal location in the world to produce a
product changes as the market for the
product matures
Growth in demand and production in
advanced nations shifts to developing nations
Developed nations over time shifts from
being an exporter to an importer
Globalization and integration of the world
economy makes this theory less relevant
23. Product Life Cycle Theory
The product life cycle theory
the production location of certain
manufactured products shifts as they go
through their life cycle
Four stages
1.Introduction
2.Growth
3.Maturity
4.Decline
26. New Trade Theory
Emerged in the 1970’s when economists
questioned the assumption of diminishing
returns to specialization
When substantial economies of scale are
present, the returns on specialization will
result in
increased productivity and lower unit costs
ability to enhance economies of scale increases
Trade is mutually beneficial because it allows
for the:
specialization of production
realization of scale economies and “learning
effects”
greater variety of goods produced
decrease in the average costs of goods
27. Economies of Scale and First Mover Advantage
Industries with high fixed costs require a
substantial proportion of the world demand
to spread fixed costs over a large volume
and to utilize specialized assets
World market may only support a few
competitors
First Mover Advantage
economic and strategic advantages to early entrants
ability to capture economies of scale and low cost
structure
scale-based cost advantage can create entry barriers
28. Implications of New Trade Theory
Nations may benefit from trade even when
they do not differ in resource endowments or
technology
A nation may predominate in the export of a
good simply because it has one or more firms
among the first to produce that good which
creates entry barriers
Those economies of scale that result from
first mover advantage translate into a
comparative advantage
Some argue that it justifies government
intervention and strategic trade policy
29. Theory of National Competitive Advantage
Michael Porter 1990
Attempts to analyze the reasons for a nation’s
competitive advantage in a particular industry
Studied 100 industries in 10 nations
Identified four major attributes promote or
impede the competitive advantage of a nation
30. Porter’s Diamond of National
Advantage
The diamond of national advantage
Four conditions are important for gaining and
maintaining competitive superiority
1. Demand conditions
2. Factor conditions
3. Related and supporting industries
4. Firm strategy, structure, and rivalry
31. Porter’s Diamond of National
Advantage
The Diamond of National Competitive Advantage
32. Porter’s Diamond
Success occurs where the diamond is most favorable
Diamond is mutually reinforcing and interdependent
Chance and government can influence the national diamond
Fig 4.6
32
33. Determinants of
National Competitive Advantage
1. Factor endowments
nation’s position in factors of production (skilled labor or
infrastructure) necessary to compete in a given industry
1. Demand conditions
nature of home demand for industry’s product/service
1. Related and supporting industries
presence or absence in a nation of supplier industries or
related industries that are nationally competitive
1. Firm strategy, structure and rivalry
conditions in the nation governing how companies are
created, organized, and managed
nature of domestic rivalry
35. Relationship of Basic to Advanced Factors
Basic factors can provide an initial advantage
Basic factors must be supported by advanced
factors to maintain competitive advantage
If weak basic factors, the government must
invest to upgrade advanced factors
Advanced factors are more likely to lead to
competitive advantage
Advanced factors are the result of investment by
35
people, companies, government
37. 3. Related and Supporting Industries
Creates clusters of supporting industries
that are internationally competitive
Must also meet requirements of other
parts of the Porter’s Diamond
38. 4. Firm Strategy, Structure and
Rivalry
Management ‘ideology’ and structure of the
firm can either help or hurt the firm
Presence of domestic rivalry and strong
competitors improves a company’s
competitiveness
39. Evaluating Porter’s Theory
If Porter is right:
his model should predict the actual pattern
of international trade in the world
countries should be exporting products from
those industries where all four components
of the diamond are favourable
Countries should be importing goods from
those industries where the components are
not favourable
Too soon to tell
40. Implications for Business
Location implications:
Disperse production activities to countries where
they can be performed most efficiently
First-Mover implications:
Invest substantial financial resources in building
a first-mover or early-mover advantage
Policy implications:
Promoting free trade is generally in the best
interests of the home-country, although not
always in the best interests of the firm
41. Why Production Factors Move
Factor mobility theory
focuses on why production factors move, the
effects of that movement on transforming factor
endowments, and the impact of international
factor mobility on world trade
Capital and labour move internationally to
gain more income
flee adverse political situations
42. Effects of Factor Movements
Factor movements alter factor
endowments
Factor movements can be substantial
for some countries, and insignificant for
others
The movement of labour and capital
are intertwined
Pros and cons of outward and inward
migration
Brain drain
Remittances
43. Trade and Factor Mobility
There are pressures for the
most abundant factors to move
to areas of scarcity
The lowest costs occur when
trade and production factors are
both mobile
44. Trade and Factor Mobility
Unrestricted Trade, Factor Mobility, and the Cost of
Tomatoes
45. Trade and Factor Mobility
Factor mobility through foreign
investment often stimulates trade
because of
the need for components
the parent’s ability to sell
complimentary products
the need for equipment for
subsidiaries
46. In What Direction Will Trade
Winds Blow?
Issues to consider
1. Displacement of jobs as developed
countries shift production to more rapidly
developing countries
2. Relationships among land, labour, and
capital will continue to evolve
3. Continued trend toward a more finely
tuned specialization of production among
countries
47. In What Direction Will Trade
Winds Blow?
Monitor
As economies grow, efficiencies of multiple
production locations also grow because they can all
gain sufficient economies of scale
Small-scale production methods may enable
countries to produce many goods efficiently for their
own consumption
Output from 3D printers
Services are growing more rapidly than products as
a portion of production and consumption within
developed countries
48. Conclusion
“Made in one or more of the following
countries: …. The exact country of
origin is unknown”
Integrated Circuit label
49. Casestudy : TESCO
1. Read and prepare the
Casestudy on TESCO
(Johnson, Whittington &
Scholes (2011)) for
discussion and presentation
next week.
2. Identify and evaluate the
challenges facing TESCO’s
global expansion by
conducting External
Environment, Industry,
Competitor analysis, SWOT
and Porter’s Diamond
analysis of overseas
locations.
50. Core Reading
Juleff, L, Chalmers, A.. and Harte, P. (2008) Business Economics in a
Global Environment, Napier University Edinburgh
Daniels, J.D., Radebaugh, L.H. and Sullivan,
D.P. (2012) International Business:
Environments and Operations. 14th edition,
Pearson
51. Next Week’s Discussion:
Comparative advantage of nations
► Reading
“Can the US bring
jobs back from
China?”
Businessweek 30 June
2008
DISCUSSION
Discuss the different national
competitive advantages of
the USA, China and
Germany in manufacturing
capabilities.
The Learning Objectives for this chapter are To understand theories of international trade To explain how free trade improves global efficiency To identify factors affecting national trade patterns To explain why a country’s export capabilities are dynamic To understand why production factors, especially labor and capital, move internationally To explain the relationship between foreign trade and international factor mobilitys
Why do countries trade? Countries trade in order to meet certain economic objectives, but they struggle with questions on what, how much, and with whom they should trade. They need to ensure that their decisions on what to produce make sense from an efficiency standpoint, and whether there are ways to improve competitiveness. Some countries allow market forces to determine trade relations, others intervene to control the process.
This Figure shows that trade in goods and services and the movement of the production factors are the means by which countries are linked internationally.
Theories that explain trade patterns explore how much countries depend on trade, in what products, and with which countries. Some theories suggest that governments should influence trade patterns, other support a laissez-faire approach.
This Figure shows the major trade theories and their emphases. Managers can use the theories to predict and understand how government policy decisions could affect business competitiveness.
Factor mobility is also an important issue in trade because it influences a nation’s competitiveness. The three factors of production are land, labor, and capital.
Some theories including mercantilism and neomercantilism explore how governments can interfere with trade flows in order to achieve certain national objectives.
The mercantilist theory suggests that countries should try to achieve a favorable balance of trade. This theory was the basis of economic thought from 1500 to 1800. Under mercantilism, governments restricted imports and subsidized the production of goods that would otherwise not be competitive in domestic or export markets.
Countries with a neomercantilist approach seek a favorable balance of trade, but do so in order to achieve some social or political objective.
Why shouldn’t countries just be self-sufficient? According to the theories of absolute and comparative advantage, specializing in the things a country does best and trading for everything else can be beneficial.
Adam Smith’s theory of absolute advantage suggested that a nation’s wealth is based on its available goods and services rather than on gold. Therefore, if trade is unrestricted, a country can specialize in what it can produce most efficiently, and trade for everything else. Consumers benefit from free trade and specialization with lower prices and more choices. A country’s advantage in the production of a particular good may be a result of a natural advantage like climate, or an acquired advantage like technology.
This Figure illustrates the production possibilities for two countries under the conditions of absolute advantage. Notice that with free trade and specialization both countries benefit.
What happens when a country can produce all products at an absolute advantage? Well, there are still gains to be made from specialization and free trade. David Ricardo explored this issue in 1817 and discovered that gains from trade occur even in a country that has an absolute advantage in all products because the country gives up less efficient output in order to focus on more efficient output.
This Figure illustrates the production possibilities for two countries under the conditions of comparative advantage. Notice that by specializing in the production of goods in which a country has a comparative advantage and trading for goods in which a country has an absolute disadvantage both countries still gain.
While the theories of specialization – absolute advantage and comparative advantage – offer policymakers a greater understanding of free trade, they are based on a number of assumptions that may not always be valid. Specifically, the theories assume that full employment exists, that economic efficiency is the primary goal of countries, that the division of gains is acceptable to both countries, that the world is composed of only two countries and two products, that there are no transportation costs, that advantages are static, and that while resources can move freely within a country, they are immobile internationally. Keep in mind that the theories can apply to trade in services as well as trade in products and that they apply to situations in which multi-country production takes place.
Every country produces so-called nontradeable goods like haircuts. When it comes to tradeable goods though, country size can be a determining factor in the production choice. Larger countries typically have more varied climates and natural resources and are usually more self-sufficient than smaller countries. Moreover, because production and market centers in large countries are more likely to be located farther away from other countries, transportation costs are higher.
What types of products does a country trade? We can use the factor proportions theory to help answer that question. The theory suggests that factor costs are determined by a country’s relative endowments of land, labor, and capital. These costs then determine which goods can be produced most efficiently. Keep in mind though that not all production factors are equal especially when it comes to labor. Moreover, how a product is produced – with capital or labor – is important as is the size of the production run required for greatest efficiency.
This Figure shows the changing composition of world trade. Most new products are developed in industrialized countries.
With whom do countries trade? Well, developed countries largely trade with other developed countries. Companies create new products in response to market conditions in their home market, and then look for markets that are close to home and most similar to what they’re accustomed to.
How do countries develop, maintain, and lose their competitive advantages? The international product life cycle theory, or PLC, offers one explanation. According to the PLC, companies manufacture products initially in the country where they were developed and researched – typically a developed country. Later, production shifts to foreign locations, and in the later stages of the product’s life, to developing economies. The theory is based on four stages: introduction, growth, maturity, and decline.
This Figure provides more details on exactly what occurs at each stage in a product’s life cycle. Keep in mind that while the theory holds for many products, it does not explain all products. In fact, today, many products are introduced at home and abroad simultaneously. Moreover, because costs drive production decisions, the initial production location may or may not be in the home country.
Another theory that helps explain why some countries have developed and sustained different competitive advantages is the diamond of national advantage theory. According to this theory, four conditions must be favorable for an industry: demand conditions, factor conditions, related and supporting industries, and firm strategy, structure, and rivalry.
This Figure provides more details on each factor that makes up the diamond of national advantage. Keep in mind though, that the existence of all four factors does not guarantee that an industry will develop, nor is it necessary given globalization. For example, today, because capital and managers are internationally mobile, it may not be necessary to depend on domestic factor conditions. Similarly, thanks to freer trade and advances in transportation, local related and supporting are not as important.
The mobility of capital, technology, and people affects trade and relative competitive positions. The factor mobility theory helps explain why production factors move, and what that means for transforming factor endowments, as well as the impact of international factor mobility on world trade.
The mobility of capital and population plays a role in a country’s factor endowments. For some countries, the movement of people can be significant. In Luxembourg for example, foreign- born people make up some 20 percent of the total population, but in Japan, account for just 2 percent. Outward migration can have a negative impact on a country if it involves the departure of educated people, but if these people then send remittances back home, it can have a positive effect. Finally, keep in mind that the movement of capital and labor is intertwined – think for example, about skilled foreign workers.
What is the relationship between trade and factor mobility? In general, if free trade is coupled with the free moving factors of production, the most efficient resource allocation should occur. The most abundant factors should move to areas of scarcity.
This Figure illustrates the substitutability of trade and factor movements under different scenarios.
When companies invest abroad they often stimulate exports from their home country through sales of components, equipment, and complimentary products.
Will the trend toward the freer movement of trade and production factors continue?
We don’t know what the future will hold, but these four interrelated factors could cause product trade to become relatively less significant in the future.