Question

Explain how the national competitive advantage theory supports and builds upon the factor proportions theory

Answer 1

National competitive advantage theory: The National advantage theory states that every country have certain factors of production which they have comparative advantage when compared to other countries. Government can use this advantage to improve country economic position

Factors proportion theory: Country produce and export goods which have they abundant factors of production and imports goods which they shortage of factors of production.

If using factifa proportion theory countries are able to understand in which factors of production they have abundant and using those factors of production which goods they can produce at low cost. Than countries can use this goods as an advantage and specialize in the production of that goods which will give them a comparative advantage in the market when compared with other countries. Thus factors proportion theory is helping the country to have competitive advantage in the market. So this is how National competitive advantage theory support and build factors proportion theory.