“whatever Recent Developments Have Occurred in International Trade Theory, in Reality, the Competitiveness of a Location Reflects the Availability of Resources in That Location.”

INTERNATIONAL BUSINESS ESSAY

“Whatever recent developments have occurred in international trade theory, in reality, the competitiveness of a location reflects the availability of resources in that location.”

INTRODUCTION

International trade theory is not a topic with unique character. It is basically a practical application of general trade theory to trading between persons from different countries. There is no great difference between mobility of factors of production inside or outside a country. We live in a world of trade, a world of small and big businesses, focused on a market of constant demand and supply. Over the past few years, as the world markets have shrunk owing to ease of global trade, the term competitiveness has been widely used in business context.

The slow yet steady globalisation process has accentuated the old-school thought that domestic policies, which were once considered to be a boon for local business development and economic competitiveness, have turned an ineffective proposition (UNCTAD 1999). A greater challenge is to seek a more proper understanding of the term regional competitiveness and to gain insight into all the driving factors behind it. Before delving into regional competitiveness, it is important first to introduce the broader notion of competitiveness in the international trade developments, as it has been used both at the micro-economic and the macro-economic level (Martin, 2003).

Mercantilism defines the idea of international trade by articulating the direction of business development by any nation. Quite logically, it is important for countries to minimize their dependence on imports, and thereby keeping proper control on allocation of goods. Moreover, every country should aim at optimal utilisation of available local resources and producing to self-sufficient levels in order to negate dependency on other nations (Grimwade, 2000).

INTERNATIONAL TRADE & COMPETITIVENESS

Competitiveness can be defined as the ability to produce services and goods which meet the test of many international markets and at the same time maintaining sustainability and high levels of income or, more generally, the ability of local regions to generate (while being exposed to external competition) relatively high income and employment levels. In other words, it is important to ensure both quality and quantity of jobs for a region to be competitive.

Global economies are based on the following characteristics that work towards facilitating international trade and overall competitiveness (Prokopenko, 2000):

 Emergence of new power centres of production and trade with deepening global competition.

 Technological advancements and Innovative environment.

 The