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International Trade (Country-based theories (Absolute advantage (Export…

- - - - Need abundant supply? produce and export goods
        Short supply enough? import goods
      - This theory shows that each country has different ratios of capital to labour
        
        For e.g. Japan has limited land & natural resources , but they have skilled workers (labour)
      - used to determine comparative advantage
      - Looks at two factors: Labour and Land&Capital
- - - - firm develops and introduce new product
        in domestic market
      - Need quick feedback from R&D
        Improvise to respond to market demands
      - minimise investment Small qty produced
      - Most output is sold in market and export sales are limited
    - - demand for product expands
      - firm builds new factories to expand capacity
        less need for R&D
      - Lower prices due to economies of scale
        and competition
      - foreign competitors emerge
    - - Market stablises and product becomes commodity
      - mass production-> lower costs
      - product begins to be imported
    - - theory may not be as applicable as how it was in 1960s, to today
- - - - Basic Factors
        
        Nation's resources
        
        spark initial productions
      - Advanced Factors
        
        result of investing in strategy + innovation
        
        account for sustained competitive advantage
    - - sophisticated home-market buyers drive companies to improve existing products and innovate to make something new
      - improve competitiveness
    - - companies that are internationally competitive do not exist in isolation
      - supporting industries form clusters of economic act. in geo area
      - each industry reinforces the competitiveness of every other industry in each cluster
      - E.g. Airline Industries, IRs
    - - Highly-skilled managers essential in creating strategies
      - Domestic industry will have a strong competitivenes:
        with a structure + rivalry is hard to battle
    - - inc. pace of privatization of state-owned companies
      - Focus on specialised factor creation
      - stimulate early demand for advanced products
      - stimulate local rivalry