Adam Smith Model, Ohlin- Hecksher model, Theory of New Trade, Ricardian theories on Globalization

Apr 22nd, 2015
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Harvard University
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China exports and India exports of the world’s pharmaceuticals, and this means they have the largest share of the world’s market of the drugs, this has been made possible by their technical feasibility and factors endowment. Therefore, industries which operate in these two states enjoy the advantage of readily available market of their products by the global markets and also local markets. The patent rights and also copyrights of their products are widely recognized, since their states protect the industries that are major revenue source for states economies.

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We say that market is in its saturation level when, quantity and quality of products and services which has been availed has already maximized the condition of the market location. During this stage of market saturation, growth can further be experienced only through services and product development and improvements. There are various trade theories which are related to growth and development of trade in China and India. There is the "Adam Smith's model" this model shows trade taking place of countries which exercise absolute advantage. Absolute advantage implies that a country or firm has ability to produce extra commodities and service than their competitors using exactly the same amount of resources. Smith firstly described this model as the principle of absolute advantage in international trade, applying labor as the only major input. Absolute advantage is influenced by simply comparison of productivities labor; this mostly implies the ability of one party to produce goods at a lower opportunity cost than the other party. The concept of this theory of absolute advantage has its origin on Adam's publication of the inquiry into the nature of the causes of nation's wealth. He argued that it was not possible for all nations to become rich simultaneously, because one country's export is another countries import, and for countries to experience growth just like their counterparts, it can only be made possible there were free trade among all nations, and if each nation special

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