Questions and Answers
What principle suggests that a country should specialize in producing goods where it has a lower opportunity cost than other countries?
Which theory emphasizes the role of economies of scale in influencing international trade?
Which of the following is a key factor in determining national competitiveness according to contemporary theories?
What is the primary focus of the International Product Life Cycle Theory?
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Which classical theory argues that nations should accumulate wealth through a trade surplus?
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What aspect is crucial for firms to gain a sustainable competitive advantage during internationalization?
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What do the determinants of national competitiveness primarily focus on?
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What characteristic primarily defines born global firms?
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Study Notes
Theories of International Trade and Investment
- Understanding international trade theories is essential for analyzing global competition and investment strategies.
Classical Theories
- Mercantilism: Emphasizes accumulating wealth through trade surplus; nations should export more than they import.
- Absolute Advantage Principle: Advocates that a country should produce goods it can produce more efficiently than others, leading to increased production and trade.
- Comparative Advantage Principle: Suggests that countries should specialize in producing goods where they have a lower opportunity cost, enabling both trading partners to benefit.
- International Product Life Cycle Theory: Proposes that products go through phases of introduction, growth, maturity, and decline, affecting where they are produced and consumed globally.
- New Trade Theory: Focuses on the role of economies of scale and network effects in trade, suggesting that some industries benefit from substantial market dominance.
Contemporary Theories
- The Competitive Advantage of Nations: Introduces the idea that national success is driven by factors like the availability of skilled labor, infrastructure, and innovation.
- Determinants of National Competitiveness: Includes a nation's policies, capabilities, resources, and market conditions that shape its global competitiveness.
- National Industrial Policy: Refers to government strategies aimed at promoting specific industries to enhance competitiveness in the global market.
Internationalization of Firms
- The Internationalization Process Model: Describes the stages firms undergo as they expand into international markets, starting from domestic focus to global operations.
- Born Global Firms: Companies that aim to derive significant competitive advantages from the use of resources and sales opportunities in multiple countries from inception.
Gaining and Sustaining Competitive Advantage
- Strategies firms can adopt include innovation, operating efficiencies, and market positioning to maintain their competitive edge in international trade contexts.
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Description
Test your knowledge on the various theories of international trade and investment, focusing on classical and contemporary theories. This quiz will help you understand Apple's competitive advantages in the global market and the key terms associated with these theories.
