The Relation Between the Competitiveness of a Location and the Availability of Resources Essay

Submitted By firezzh
Words: 3540
Pages: 15

Introduction
This essay will discuss the relation between the competitiveness of a location and the availability of resources. Reference to the Factor Proportion Theory, Product Life Cycle Theory and Intra-industry Trade in three steps and use several examples to support these theory.
In the first step, elaborated perspectives that the direct cause of international trade is regional trade or international trade price difference and the absolute difference between the cost of international. Resources of each country are not the same and rational use of resources will be able to bring a competitive advantage in the market. In the second step, This essay pointed out that technology becomes a very important resource. Technology can bring considerable gains and enhance competitiveness in a region. And elaborated perspectives that demand factors and supply factors equally are important factors of restricting international trade and take timely measures to balance supply and demand in the market is crucial in the third step.

Factor Proportion Theory
In reality, the competitiveness of a location in business have inextricably linked with the availability of resources. The “Factor Proportion Theory” and it also known as “Factor Endowent Theory”, referred to as “H-O Theory”. According to “Factor Proportion Theory”: Each region or country with a relative abundance of factors of production (land, labor and capital) engaged in commodity production is in a relatively favorable position; In opposite, relatively scarce factors of production engaged in commodity production is in a relatively unfavorable position. So, each country should produce and output wealth of commodities and input scarce commodities in the system of the international division of labor and the international trading. (Jeffrey, 1989)
The direct cause of international trade is regional trade or international trade price difference and the absolute difference between the cost of international. Compare the cost difference is the important condition for international trade, the proportion of the cost of goods is different in the two countries; Different countries have different cost ratio because of the different price ratio from each country's domestic production factors, and different prices of the factors of production is determined by the relation between supply and demand. The price of factors of production is different because of the relation between supply and demand of factors of production are different from different countries. The quantity, type and quality of the various factors are different from each countries resulting in the supply of factors of production are different from each countries. And international trade is built on the basis of the variety of different factors of production and the different price. Even if the supply of the factors of production have the same proportion will also appear different proportion of the price of production factors because of the demand from different countries is different for factors of production, thus to provide the conditions for international trade. (Tanigaki, 2007)
Merchandise trade usually tend to eliminate international differences in factors of production income of wages, ground rents and profit. The international division of labor and the interests of the international trade so that each country can make more efficient use of the various factors of production. Under the conditions of the international division of labor, the most effective use of the various factors of production will get more products of society. The result of production is not satisfactory if the factors of production of international can not be full circulation, but the flow of products can compensate for the factors of production in the international that were lack of fluidity insufficient. Some of defects of uneven distribution of the factors of production in the international can be solved by international trade. Each countries…