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Chapter 5 of International Business, Theories ofInternational Trade and Investment

Question:

Summarize factor proportions theory. What factors are mostabundant in China, Japan, Germany, Saudi Arabia, and the UnitedStates? Visit globalEDGE™ for helpful information.

Expert Answer

Factor ProportionTheory: It is talking about the difference in theproduction factors that lead to the global trade. Each country ofthe world has different potential for different production. Due tothis the production of goods and services are different in thecountries. Usually Labour and capital determines the factorproportion. Here capital and labour efficiency