Description
The law of comparative advantage states that nations, companies and indviduals can benefit by specializing their production in those things that they can do at relatively lower cost, or provide better similar things at the same cost as some other nation company or individual. 1) Define in your own words the main ideas behind the Factor Proportions, Product Life-Cycle, and National Competitive Advantage theories. For each explain how they reinforce, clarify, or extend the law of comparative advantage.2) Explain how companies might use foreign direct investment (FDI) to enhance its comparative advantage relative to its competitors. 3) What can nations do to maximize the opportunity for FDI and trade by businsesses operating within their borders? Do these government actions create an unfair advantage over companies that operate in countries that do not promote trade and FDI?
