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Global Business Today Ninth Edition Chapter 6
International Trade Theory
Chapter Outline
OPENING CASE: Creating the World’s Biggest Free Trade Zone
INTRODUCTION
AN OVERVIEW OF TRADE THEORY
The Benefits of Trade
The Pattern of International Trade
Trade Theory and Government Policy
MERCANTILISM
Country Focus: Is China a Neo-Mercantilist Nation?
ABSOLUTE ADVANTAGE
COMPARATIVE ADVANTAGE
The Gains from Trade
Qualifications and Assumptions
Extensions of the Ricardian Model
Country Focus: Moving U.S. White Collar Jobs Offshore
HECKSCHER-OHLIN THEORY
The Leontief Paradox
THE PRODUCT LIFE CYCLE THEORY
Evaluating the Product Life Cycle Theory
Product Life-Cycle Theory in the Twenty-First Century
NEW TRADE THEORY
Increasing Product Variety and Reducing Costs
Economies of Scale, First Mover Advantages and the Pattern of Trade
Implications of New Trade Theory
NATIONAL COMPETITIVE ADVANTAGE: PORTER’S DIAMOND
Global Business Today Ninth Edition Chapter 6
Factor Endowments
Demand Conditions
Related and Supporting Industries
Firm Strategy, Structure, Rivalry
Evaluating Porter’s Theory
FOCUS ON MANAGERIAL IMPLICATIONS
Location
First-Mover Advantages
Government Policy
SUMMARY
CRITICAL THINKING AND DISCUSSION QUESTIONS
CLOSING CASE: The Rise of Bangladesh’s Textile Trade
Learning Objectives
1. Understand why nations trade with each other.
2. Summarize the different theories explaining trade flows between nations.
3. Recognize why many economists believe that unrestricted free trade between nations will raise
the economic welfare of all countries that participate in a free trade system.
4. Explain the arguments of those who maintain that government can play a proactive role in
promoting national competitive advantage in certain industries.
5. Understand the important implications that international trade theory holds for business practice.
Chapter Summary
This chapter focuses on the benefits of international trade and introduces several theories that help
explain the patterns of international trade that are observed in practice. The discussion begins
with an explanation of the theory of mercantilism, and then proceeds to discuss the theories of
absolute advantage and comparative advantage. Four additional theories are discussed, including
the Heckscher-Ohlin theory, the product life cycle theory, the new trade theory, and the theory of
national competitive advantage. Each of these theories helps explain why certain goods are (or
should be) made in certain countries. The chapter ends by discussing the link between the theories
of international trade and (1) a firm’s decision about where (in the world) to locate its various
productive activities, (2) the importance of establishing first-mover advantages, and (3)
government trade policies.
Global Business Today Ninth Edition Chapter 6
Opening Case: Creating the World’s Biggest Free Trade Zone
Summary
The opening case describes the benefits of a new free trade deal between the United States and the
European Union. The agreement, which is expected to be finalized in 2014, should reduce or
eliminate the already low tariffs between the United States and the European Union effectively
leaving both in a better position. Many are hailing the proposed agreement as acting as a cost-free
stimulus package that will help to create new jobs and economic growth in both European Union
counties and in the United States. Discussion of the case can revolve around the following
questions:
QUESTION 1: Supporters of the proposed new trade deal between the United States and the
European Union claim that it will make all countries involved better off. Do you agree? Who
stands to lose as a result of the trade pact?
QUESTION 2: What does the proposed agreement between the United States and the European
Union mean for U.S. companies selling to the European Union? Will consumers benefit?
Chapter Outline with Lecture Notes and Teaching Tips
INTRODUCTION
Global Business Today Ninth Edition Chapter 6
A) This chapter has two goals. The first goal is to review a number of theories that explain why it
is beneficial for a country to engage in international trade. The second goal is to explain the
pattern of international trade that is observed in the world economy.
Lecture Note: It is often worth asking students before discussing the theories why countries trade
the products they do. They will frequently – with a little prompting hit upon many of the ideas
presented in this chapter and consequently relate better to the various theories that are discussed.
AN OVERVIEW OF TRADE THEORY
A) Free trade refers to a situation where a government does not attempt to influence through
quotas or duties what its citizens can buy from another country or what they can produce and sell
to another country.
The Benefits of Trade
B) The great strength of the theories of Smith, Ricardo, and Hecksher-Ohlin is that they identify
with precision the specific benefits of trade. Common sense suggests that some trade is beneficial.
The theories of Smith, Ricardo and Hecksher-Ohlin go beyond common sense to show why it is
beneficial for a country to engage in international trade even for products it is able to produce for
itself. The gains arise because international trade allows a country to specialize in the manufacture
and export of products that can be produced most efficiently in that country, while importing
products that can be produced more efficiently in other countries.
The Pattern of International Trade
C) Some patterns of trade are fairly easy to explain - it is obvious why Saudi Arabia exports oil,
Ghana exports cocoa, and Brazil exports coffee. Yet others are not so obvious or easily explained.
Why does Switzerland export chemicals, pharmaceuticals, watches, and jewelry? Why does Japan
export automobiles, consumer electronics, and machine tools?
D) New trade theory stresses that in some cases countries specialize in the production and export
of particular products not because of underlying differences in factor endowments, but because in
certain industries the world market can support only a limited number of firms. So a country’s
pattern of trade may be a reflection of the ability of firms in that nation to capture first-mover
advantages.
E) Michael Porter suggested that a country’s factor endowments as well as domestic demand and
domestic rivalry are important in explaining a nation’s dominance in the production and export of
particular products.
Trade Theory and Government Policy
F) While all of the trade theories discussed in the text agree that international trade is beneficial to
Global Business Today Ninth Edition Chapter 6
a country, they lack agreement in their recommendations for government policy. Mercantilism
makes a crude case for government involvement in promoting exports and limiting imports. Smith,
Ricardo, and Heckscher-Ohlin all promote the notion of unrestricted free trade. The argument for
unrestricted free trade is that both import controls and export incentives (such as subsidies) are self
defeating and result in wasted resources. Yet both the new trade theory and Porter’s theory of
national competitive advantage can be interpreted as justifying some limited and selective
government intervention to support the development of certain export-oriented industries.
MERCANTILISM
A) The first theory of international trade emerged in England in the mid-16th century. Referred to
as mercantilism, its principle assertion was that it is in a country’s best interest to maintain a trade
surplus, to export more than it imports. Consistent with this belief, the mercantilist doctrine
advocated government intervention to achieve a surplus in the balance of trade.
Teaching Note: A historical perspective of mercantilism is available at
{http://www.referenceforbusiness.com/encyclopedia/Man-Mix/Mercantilism.html}.
B) The flaw of mercantilism was that it viewed trade as a zero-sum game, one in which a gain by
one country results in a loss by another. It was left to Adam Smith and David Ricardo to show the
shortsightedness of this approach and to demonstrate that trade is a positive-sum game. As an
economic philosophy, mercantilism is problematic and not valid. Yet many political views today
have the goal of boosting exports while limiting imports by seeking only selective liberalization of
trade.
Country Focus: Is China a Neo-Mercantilist Nation?
Summary
This feature analyzes claims that China is a neo-mercantilist nation. Exports are largely
responsible for China’s recent rapid economic growth. The country, capitalizing on its cheap labor
force, has focused on converting raw materials into products that are exported to developed
countries like the United States. In 2008, China’s trade surplus was a record $280 billion before
dropping to $155 billion in 2011. Even so, some critics have suggested that China is following a
neo-mercantilist policy.
Suggested Discussion Questions
1. Are the claims that China is following a neo-mercantilist policy valid? Why or why not?
© 2016 by McGraw-Hill Education.
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2. What incentive does China have to open its markets to foreign products? Why might China
resist such a move?
Discussion Points: China is under significant pressure from many countries including the United
3. Is there evidence that China is pursuing an import substitution policy? How would this type of
policy benefit the country?
Discussion Points: Countries following an import substitution policy try to substitute domestic
10-15/us-report-criticizes-chinas-currency-policy}.
ABSOLUTE ADVANTAGE
A) In his 1776 landmark book The Wealth of Nations, Adam Smith attacked the mercantilist
assumption that trade is a zero-sum game. Smith argued that countries differ in their ability to
produce goods efficiently, and that a country has an absolute advantage in the production of a
product when it is more efficient than any other country in producing it. According to Smith,
countries should specialize in the production of goods for which they have an absolute advantage
and then trade these goods for the goods produced by other countries. The text provides a
numerical example of Smith’s theory.
B) When each country has an absolute advantage in one product, it is clear that trade is beneficial.
But what if one country has an absolute advantage in both products?
COMPARATIVE ADVANTAGE
Global Business Today Ninth Edition Chapter 6
A) David Ricardo took Adam Smith’s theory one step further by exploring what might happen
when one country has an absolute advantage in the production of all goods. Smith’s theory of
absolute advantage suggests that such a country might derive no benefits from international trade.
In his 1817 book Principles of Political Economy, Ricardo showed that this was not the case.
According to Ricardo’s theory of comparative advantage, it makes sense for a country to
specialize in the production of those goods that it produces most efficiently and to buy the goods
that it produces less efficiently from other countries, even if this means buying goods from other
countries that it could produce more efficiently itself. The textbook provides a detailed example to
explain the rationale of this theory.
B) The simple example of comparative advantage presented in the text makes a number of
assumptions: only two countries and two goods; zero transportation costs; similar prices and
values; resources are mobile between goods within countries, but not across countries; constant
returns to scale; fixed stocks of resources; and no effects on income distribution within countries.
While these are all unrealistic, the general proposition that countries will produce and export those
goods in which they are most efficient has been shown to be quite valid.
Teaching Tip: For more on the ideas and philosophies of David Ricardo, go to
{http://www.econlib.org/library/Enc/bios/Ricardo.html}.
The Gains from Trade
C) The theory of comparative advantage argues that trade is a positive sum gain in which all gain.
It provides a strong rationale for encouraging free trade.
Qualifications and Assumptions
D) The simple example of comparative advantage presented in the text makes a number of
assumptions: only two countries and two goods; zero transportation costs; similar prices and
values; resources are mobile between goods within countries, but not across countries; constant
returns to scale; fixed stocks of resources; and no effects on income distribution within countries.
While these are all unrealistic, the general proposition that countries will produce and export those
goods in which they are most efficient has been shown to be quite valid.
Extensions of the Ricardian Model
E) The text explores the effects of relaxing the assumptions that resources are mobile between
goods within a country, and that trade does not change a country’s stock of resources or the
efficiency with which those resources are utilized.
Immobile Resources
F) As illustrated by the example in the test, resources do not always move freely from one
economic activity to another.
Global Business Today Ninth Edition Chapter 6
Diminishing Returns
G) The model of comparative advantage assumes constant returns to specialization (the units of
resources required to produce a good are assumed to remain constant no matter where one is on a
country’s production possibility frontier). However, it is more realistic to assume diminishing
returns to specialization (more units of resources are required to produce each additional unit).
H) Diminishing returns are more realistic because not all resources are of the same quality, and
because different goods use resources in different proportions. Diminishing returns to
specialization suggest that the gains from specialization will probably be exhausted before
specialization is complete. Still, unrestricted free trade makes sense even if the gains are not as
great as suggested by the constant returns case.
Dynamic Effects and Economic Growth
I) Opening an economy to trade is likely to generate dynamic gains of two types. First, trade
might increase a country's stock of resources as increased supplies become available from abroad.
Second, free trade might increase the efficiency of resource utilization, and free up resources for
other uses.
The Samuelson Critique
J) Samuelson argues that in some cases, the dynamic gains from trade may not be so beneficial.
He argues that the ability to off-shore services jobs that were traditionally not internationally
mobile may have the effect of a mass inward migration into the United States, where wages fall,
effectively negating the gains of international trade.
Video Note: The video in the International Business Library on Pinterest
(http://www.pinterest.com/mheibvideos/) Late Economist Samuelson Bridged Math, Money
explores Samuelson’s contributions to the fields of economics and international business.
Country Focus: Moving U.S. White Collar Jobs Offshore
Summary
This feature goes to the heart of a debate that has been played out many times over the past half
century—the transference of jobs from the United States to lower-wage countries. The difference
now however, is that rather than blue-collar jobs being transferred, the new trend is for white-
collar jobs to move, jobs associated with the knowledge-based economy.
Suggested Discussion Questions
1. Will the United States suffer from the loss of highly skilled and high paying jobs? What does
the transference of white-collar jobs mean to the average American?
Global Business Today Ninth Edition Chapter 6
© 2016 by McGraw-Hill Education.
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110
Discussion Points: This hot issue is a highly sensitive one for many Americans—especially those
who have seen their once secure jobs being shipped offshore. Many students will probably know
someone who has suffered from this very situation, and may claim that companies have lost all
loyalty to their employees and simply become profit seekers. Other students however, may point
that companies are in business to make a profit, and do well for other stakeholders such as
investors. Some students will simply argue that the loss of white-collar jobs is merely a
manifestation of companies viewing the world as a borderless market—where they seek resources
wherever they are cheapest, produce in the optimal location, and sell wherever there is demand.
2. What does the transference of white-collar jobs mean to recipient countries such as India and the
Philippines?
3. Why do American companies transfer white-collar jobs to countries like India and the
Philippines?
Lecture Note: Outsourcing call centers and other white collar jobs is common in many industries
today, however it can also be controversial. To extend the discussion of outsourcing to include this
angle, consider {http://www.businessweek.com/news/2014-10-24/canada-union-sad-that-ford-
engine-work-going-to-mexico}.
Lecture Note: To extend this discussion, consider {http://www.businessweek.com/articles/2012-
03-15/outsourcing-a-passage-out-of-india}. This multi-country analysis explores the advantages
and drawbacks of outsourcing to several different locations.
Lecture Note: Outsourcing is not always beneficial for companies. To extend this discussion,
consider {http://www.businessweek.com/articles/2013-10-28/more-companies-see-advantage-to-
manufacturing-in-the-u-dot-s} and {http://www.businessweek.com/magazine/for-some-us-
manufacturers-time-to-head-home-02022012.html}.
Evidence for the Link between Trade and Growth
Global Business Today Ninth Edition Chapter 6
K) Studies exploring the relationship between trade and economic growth suggest that countries
that adopt a more open stance toward international trade enjoy higher growth rates than those that
close their economies to trade.
HECKSCHER-OHLIN THEORY
A) Hecksher and Ohlin argued that comparative advantage arises from differences in national
factor endowments (land, labor, and capital). As a result, the Heckscher-Ohlin theory predicts
that countries will export goods that make intensive use of those factors that are locally abundant,
while importing goods that make intensive use of factors that are locally scarce.
Teaching Tip: To learn more about Bertil Ohlin go to
{http://www.econlib.org/library/Enc/bios/Ohlin.html}.
The Leontief Paradox
B) Using the Heckscher-Ohlin theory, Leontief, in 1953 postulated that since the United States was
relatively abundant in capital compared to other nations, the United States would be an exporter of
capital intensive goods and an importer of labor-intensive goods. To his surprise, however, he
found that U.S. exports were less capital intensive than U.S. imports. Since this result was at
variance with the predictions of the theory, it has become know as the Leontief Paradox.
Teaching Tip: A more extensive discussion of Wassily Leontief is available at
{http://www.econlib.org/library/Enc/bios/Leontief.html}.
C) Recent research suggests that the Heckscher-Ohlin theory gains predictive power if the impact
of differences in technology on productivity is controlled for.
THE PRODUCT LIFE CYCLE THEORY
A) Raymond Vernon initially proposed the product life-cycle theory in the mid-1960s. According
to the theory as products mature both the location of sales and the optimal production location will
change affecting the flow and direction of trade.
B) According to Vernon, early in the life cycle of a typical new product, while demand is starting
to grow in the United States, demand in other advanced countries is limited to high-income groups.
The limited initial demand in other advanced countries does not make it worthwhile for firms in
those countries to start producing the new product, but it does necessitate some exports from the
United States to those countries. Over time, however, demand for the new product starts to grow
in other advanced countries. As it does, it becomes beneficial for foreign producers to begin
producing for their home markets. In addition, U.S. firms might set up production facilities in
those advanced countries where demand is growing. Consequently, production within other
advanced countries begins to limit the potential for exports from the United States.
Global Business Today Ninth Edition Chapter 6
C) As the market in the United States and other advanced nations matures, the product becomes
more standardized, and price becomes the main competitive weapon. One result is that producers
based in advanced countries where labor costs are lower than the United States might now be able
to export to the United States.
D) If cost pressures become intense, the process might not stop there. The cycle by which the
United States lost its advantage to other advanced countries might be repeated once more as
developing countries begin to acquire a production advantage over advanced countries.
E) The consequence of these trends for the pattern of world trade is that the United States (and
other advanced countries) switches from being an exporter of the product to an importer of the
product as production becomes more concentrated in lower-cost foreign locations.
Evaluating the Product Life Cycle Theory
F) While the product life cycle theory accurately explains what has happened for products like
photocopiers and a number of other high technology products developed in the United States in the
1960s and 1970s, the increasing globalization and integration of the world economy has made this
theory less valid in today's world.
NEW TRADE THEORY
A) New trade theory suggests that the ability of firms to realize economies of scale (unit cost
reductions associated with a large scale of output) may help explain international trade patterns.
Video Note: The video in the International Business Library on Pinterest
(http://www.pinterest.com/mheibvideos/) U.S. Economist Krugman Wins Nobel Prize in
Economics explores Krugman’s contributions to the fields of economics and international
business.
B) New trade theory makes two important points. First, trade can increase the variety of goods
available to consumers and decrease the average cost of those goods. Second, in industries where
the output necessary to attain economies of scale is significant relative to total world demand, only
a few companies may be able to survive. Being a first mover in these industries is important.
Increasing Product Variety and Reducing Costs
C) According to new trade theory, with trade a nation may be able to specialize in producing a
narrower range of products than it would in the absence of trade. By buying goods that it does not
make from other countries, each nation can simultaneously increase the variety of goods available
to its consumers and lower the costs of those goods.
Economies of Scale, First Mover Advantages, and the Pattern of Trade
D) A second theme in new trade theory is that the pattern of trade we observe in the world
Global Business Today Ninth Edition Chapter 6
economy may be the result of first mover advantages (economic and strategic advantages that
accrue to early entrants into an industry) and economies of scale.
Implications of New Trade Theory
E) New trade theory suggests that nations may benefit from trade even when they do not differ in
resource endowments or technology. The theory also suggests that a country may predominate in
the export of a good simply because it was lucky enough to have first mover firms.
F) New trade theory is at variance with the Hecksher-Ohlin theory, which suggests that a country
will predominate in the export of a product when it is particularly well endowed with those factors
used intensively in its manufacture. New trade theory does not contradict the theory of
comparative advantage, but instead identifies a source of comparative advantage.
G) An obvious and controversial extension of new trade theory is the implication that governments
should consider strategic trade policies. Strategic trade policies would suggest that governments
should nurture and protect firms and industries where first mover advantages and economies of
scale are likely to be important, as doing so can increase the chance that a firm will build
economies of scale and eventually end up a winner in the global competitive race.
NATIONAL COMPETITIVE ADVANTAGE: PORTER’S DIAMOND
A) Porter’s 1990 study tried to explain why a nation achieves international success in a particular
industry. This study found four broad attributes – factor endowments, demand conditions, relating
and supporting industries, and firm strategy, structure, and rivalry - that promote or impede the
creation of competitive advantage. These are shown as a diamond in Figure 6.6. Porter argues
that firms are most likely to succeed in industries where the diamond is favorable.
Factor Endowments
B) A nation's position in factors of production such as skilled labor or infrastructure necessary to
compete in a given industry can be critical. These factors can be either basic (natural resources,
climate, location) or advanced (skilled labor, infrastructure, technological know-how). While
either can be important, advanced factors are more likely to lead to competitive advantage.
Demand Conditions
C) The nature of home demand for the industry’s product or service influences the development of
capabilities. Sophisticated and demanding customers pressure firms to be competitive.
Relating and Supporting Industries
D) The presence in a nation of supplier industries and related industries that are internationally
competitive can spill over and contribute to other industries. Successful industries tend to be
grouped in clusters in countries - having world class producers of semi-conductor processing
Global Business Today Ninth Edition Chapter 6
equipment can lead to (and be a result of having) a competitive semi-conductor industry.
Firm Strategy, Structure, and Rivalry
E) The conditions in the nation governing how companies are created, organized, and managed,
and the nature of domestic rivalry impacts firms' competitiveness. Firms that face strong domestic
competition will be better able to face competitors from other firms.
Evaluating Porter’s Theory
F) In addition to these four main attributes, government policies and chance can impact any of the
four. Government policy can affect demand through product standards, influence rivalry through
regulation and antitrust laws, and impact the availability of highly educated workers and advanced
transportation infrastructure.
G) The four attributes of the diamond, government policy, and chance work as a reinforcing
system, complementing each other and in combination creating the conditions appropriate for
competitive advantage. To date, Porter’s theory has not been subjected to detailed empirical
testing.
FOCUS ON MANAGERIAL IMPLICATIONS
A) There are at least three main implications of the material discussed in this chapter for
international businesses: location implications, first-mover implications, and policy implications.
Location
B) One way in which the material discussed in this chapter matters to an international business
concerns the link between the theories of international trade and a firm’s decision about where to
locate its various productive activities. Underlying most of the theories is the notion that different
countries have particular advantages in different productive activities. Thus, from a profit
perspective, it makes sense for a firm to disperse its various productive activities to those countries
where, according to the theory of international trade, they can be performed most efficiently.
Being a first mover can have important competitive implications, especially if there are economies
of scale and the global industry will only support a few competitors. Firms need to be prepared to
undertake huge investments and suffer losses for several years in order to reap the eventual
rewards.
First Mover Advantages
C) Being a first mover can have important competitive implications, especially if there are
economies of scale and the global industry will only support a few competitors. Firms need to be
prepared to undertake huge investments and suffer losses for several years in order to reap the
eventual rewards.
Global Business Today Ninth Edition Chapter 6
Government Policy
D) The theories of international trade also matter to international businesses because business
firms are major players on the international trade scene. Because of their pivotal role in
international trade, business firms can and do exert a strong influence on government trade policy.
Government policies with respect to free trade or protecting domestic industries can significantly
impact global competitiveness.
E) One of the most important implications for businesses is that they should work to encourage
governmental policies that support free trade. If a business is able to get its goods from the best
sources worldwide, and compete in the sale of products into the most competitive markets, it has a
good chance of surviving and prospering. If such openness is restricted, a business’s long-term
survival will be in greater question.
Teaching Tip: For information about foreign governments and their approaches to international
trade, visit the Electronic Embassy at {http://www.embassy.org/}. This site provides links to all of
the foreign embassies located in Washington D.C.
Critical Thinking and Discussion Questions
1. “Mercantilism is a bankrupt theory that has no place in the modern world.” Discuss.
2. Is free trade fair? Discuss!
3. Unions in developed nations often oppose imports from low-wage countries and advocate trade
Global Business Today Ninth Edition Chapter 6
barriers to protect jobs from what they often characterize as “unfair” import competition. Is such
competition “unfair?” Do you think that this argument is in the best interests of (a) the unions, (b)
the people they represent, and/or (c) the country as a whole?
4. What are the potential costs of adopting a free trade regime? Do you think governments should
do anything to reduce these costs? What?
5. Reread the Country Focus on “Is China a Neo-Mercantilist Nation?”
a) Do you think China is pursuing an economic policy that can be characterized as neo-
Mercantilist?
b) What should the United States, and other countries, do about this?
6. Reread the country focus feature on moving white collar jobs off shore.
a) Who benefits from the outsourcing of skilled white collar jobs to developing nations? Who are
the losers?
b) Is there a difference between the transference of high paying white collar jobs such as computer
programming and accounting, to developing nations, and low paying blue collar jobs? If so, what
is the difference, and should government do anything to stop the flow of white collar jobs out of
Global Business Today Ninth Edition Chapter 6
the country to countries like India?
7. Drawing upon the new trade theory and Porter’s theory of national competitive advantage,
outline the case for government policies that would build national competitive advantage in
biotechnology. What kind of policies would you recommend that the government adopt? Are
these policies at variance with the basic free trade philosophy?
8. The world’s poorest countries are at a competitive disadvantage in every sector of their
economies. They have little to export. They have no capital; their land is of poor quality; they
often have too many people given available work opportunities; and they are poorly educated.
Free trade cannot possibly be in the interests of such nations! Discuss.
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118
QUESTION 1: How might (a) U.S. pharmaceutical companies and (b) U.S. consumers benefit
from the rise of the Indian pharmaceutical industry?
ANSWER 1: Since India’s 2005 agreement with the WTO to comply with its rules on intellectual
QUESTION 2: Who might have lost out as a result of the recent rise of the Indian pharmaceutical
industry?
QUESTION 3: Do the benefits from trade with the Indian pharmaceutical sector outweigh the
losses?
Global Business Today Ninth Edition Chapter 6
QUESTION 4: What international trade theory (or theories) best explain the rise of India as a
major exporter of pharmaceuticals?
09082011.html}.
Continuous Case Concept
In the last few decades, the auto industry has shifted from one in which a few, large companies
primarily manufactured in their domestic markets and sold in their domestic markets, to one in
which a few large companies serve the world market, manufacturing around the globe to capture
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120
Exercise 1
Search phrase: World Trade Organization International Trade Statistics
Resource Name: World Trade Organization (WTO): International Trade Statistics
Exercise 2
Search phrase: Australian suppliers
Resource Name: Australian Suppliers Directory
Website: http://www.austrade.gov.au/Buy/Find-Australian-Suppliers/
globalEDGE Category: Company Directories
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121
