1. 2. INTERNATIONAL TRADE THEORIES 2.1. Absolute Advantage According to Adam Smith 1776) in….., a country has an absolute advantage in the production of a product when it is more efficient than any other country in producing it. If two countries specialize in production of different products (in which each has an absolute advantage) and trade with each other, both countries will have more of both products available to them for consumption. 2.2.
Comparative advantage is the theory that free trade between two or more countries will increase consumption and is of mutual benefit to both countries. Each country should export a good for which it has a comparative advantage over and export surplus production in exchange for goods produced in another country which has a comparative advantage for the good. This is under the assumption that there is differences in labour productivity in both countries. According to Comparative advantage even a country with a comparative disadvantage will gain from specialising in most efficient goods. According to Adam Smith (1776) Wealth of Nations, absolute advantage is the ability of a country to produce more than other countries but with less resources.
Consumerism is also a contributing factor to poverty around the world and numerous other social and ecological problems. As a humankind, we started to ask questions about what we would leave behind to future generations. Thus the
This form of knowledge does not distinguishlimitations based on nationhood, religion and ethnicity that is why is it said to have encouraged globalization. The second factor is capitalism, which is a methodused to organizeeconomic activities that will result in making a profit and this phase of capitalism is regarded as the main force behind globalization. The constant concern to build up a surplus or fail constrains capital to look for out cheaper production sites and new markets for their products, which in realistic terms means the world. The third factor is technology which is the application of knowledge, in general scientific knowledge, to solve practical problems. Technological innovations in production and transportation were important during the early modern phase of globalization, whereas technological innovations in information and communication were important during the late modern phase of globalization.
A competitive advantage is an advantage in some way that has a company to other companies in the same sector or market, and allowing you to have a better performance than the companies and thus a competitive position in the sector or market. Some areas in which a company could have a competitive advantage are the product, the brand, customer service, production process, technology, personnel, infrastructure, location, distribution, etc. which it is a competitive advantage For example, a company might have a competitive advantage in the following cases: to have a single innovative product and difficult to imitate by competitors, which allows you to differentiate or distinguish this. to have a valuable brand that allows that any product entering
These factors create the national environment where organizations compete. Each attribute affect the competitive advantage of the nation. Competitive advantage is a result for nations that create factors and then work to upgrade them. First attribute is the Factor condition, the nation creation of factors of production, natural recourses, skilled labor, Capital,
Introduction: Consumerism has an incredible effect on the society. In order to keep up with others and the world, people want to buy and spend more than they did before. This practice has been going on since the last many years and therefore this continuously increasing demand has turned the balance of the earth upside down. The imbalance of the Earth now displays itself in many forms of climatic changes. This high level of consumption has affected the planet in many ways: large amount of energy input is required, large quantity of pollution is produced during production and equally large amount of waste at disposal of the product.
This question has been examined widely and explicitly by many researchers around the world. Financial system development causes economic growth follows the supply–leading hypothesis. A country where financial institutions are not facilitating financial activities in the domestic and international economy may have to face many problems, and that ultimately affects the economic development of the country. Efficient financial system helps a country to achieve the following objectives: • Transfer of financial resources: Obtaining funds from the surplus holders such as household individuals, business firms, public/private sector, government etc. is an important role played by financial
Even one of the determinant forces behind the economic development of the high standard of living countries was agriculture (Entringer and Jaeger, 1968)13. Agriculture should be given more importance in third world countries, since agricultural contribution to GDP and export earnings from it, could be a potential source of economic development for those countries, and in these countries agriculture represents main source of income of the majority of population (Dietrich Kebschull,
Factor Conditions: This is a nation’s position on factors of production such as skilled labour force or infrastructure that is necessary in order to compete in a given industry. Porter however believes that it is important to go beyond the traditional factors of production in that the most important factors were not