Both the factor-proportions theory and the country similarity theory address patterns of trade, i.e. partner nations. Compare and contrast the two theories. In what ways are they similar, and in what ways are they different?
Select two countries located in different global regions. Identify the natural advantages and the acquired advantages of each of the countries. Compare and contrast the economic, cultural, and political similarities and differences
Factors-Proportions theory and Country Similarity theory
The similarities of the two theories lie in their common objectives?to be able to be leaders in overseas market.
These two theories differ from each other in the sense that Factors-Proportions theory focuses on differences specifically on labor endowment as a cost factor while Country Similarity theory studies the economic similarities of countries and advances the idea that countries having the most similarities with one another in terms of degree of industrialization, per capita incomes, savings habits, communications and transportation systems, degree of technology, language, among others with be most likely to trade with one another. The two theories seem to clash with each other? Factors-Proportions theory is on (labor) competition while the Country Similarity theory focuses on ...
This solution contrasts both the factor-proportions theory and the country similarity theory address patterns of trade.
Two (2) countries-- Japan and Germany-- were identified in terms of their natural advantages and the acquired advantages including their economic, cultural, and political similarities and differences.