Spoke-N-Power Case

Thinking about our discussion so far, what do you think was most important in helping China become the world's factory floor and the source of parts like the ones we buy?

China's decision to loosen barriers to trade and investment

What do we call the economic benefits countries realize when they specialize in the production and export of goods they can produce most efficiently, while importing goods they cannot produce so efficiently from other countries?

Gains from trade

which are the two other variables that Porter focuses on?

Government and Chance

which trade theory suggests that a nation's comparative advantage arises from differences in national factor endowments?

Heckscher-Ohlin theory

Can you guess why it made sense for us to source our parts from China when we initially set up production?

I think it's probably because China was the most efficient producer of the parts

Which would you like to take a look at first?

Location Factors

Which of these is NOT one of the four attribute to making up Porter's diamond of competitive advantage?

Supply conditions

Using trade theory, can you explain why was China more efficient at producing parts?

Sure! China had the large, relatively inexpensive labor force needed for efficiently producing commodity-type parts

Based on what we've discussed, how would you characterize the U.S. workforce relative to China's?

The U.S. workforce is more capital intensive.

which trade theory answers the question of why it makes sense for a country to specialize in producing those goods that it can produce most efficiently, while buying goods that it can produce relatively less efficiently from other countries?

Theory of comparative advantage

Based on what you know about the benefits of efficient resource utilization, what should we expect?

We should expect economists to encourage lower barriers to trade