ARBUS301 Chapter 5: Reading 3
26 Jan 2019
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Document Summary
Comparative advantage (country-specific advantage): describes superior features of a nation that provide unique benefits in global competition. Ex: entrepreneurial orientation, availability of venture capital, and innovative capacity. Competitive advantage (firm-specific advantage): refers to assets and capabilities of a company that are difficult for competitors to imitate. Trade enables countries to use their natural resources more efficiently through specialization and thus enables industries and workers to be more productive. It is generally advantageous for all countries to participate in international trade: factor proportions theory: products differ in types and quantities of factors (labour, natural resources, capital) required for their production. In addition to efficiency, the quantity of production factors also determines international trade patterns: international product life cycle theory: illustrates that firms worldwide are continuously creating new products, and others are imitating them. Also, each product and its manufacturing technologies go through three stages of evolution introduction, maturity, and standardization.
