International Business Report: Australia and Asian Economies

This report delves into the realm of international business, specifically examining the influence of factor endowments on trade patterns. It begins by defining factor endowments and their role in economic prosperity, highlighting the importance of labor, land, entrepreneurship, and capital. The report then provides a comparative analysis of Australia and its neighboring Asian countries, including China, India, Singapore, Indonesia, and Vietnam, detailing their respective endowments in terms of natural resources, labor, and capital. The analysis explores how these differences in endowments shape trade patterns, with examples like Australia's advantage in grain production due to its fertile land and abundant labor supply in countries like Vietnam and India driving specialization in the manufacturing sector. The report also discusses how these differences in factor endowments lead to trade, allowing countries access to goods and services they cannot produce domestically. Finally, the report concludes with a discussion of the trade patterns based on the endowments of the countries.

Running head: INTERNATIONAL BUSINESS
International Business
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Executive Summary:
The report aims at discussing the international business in respect to the factor endowments. The
report gives an insight into the factor endowments of Australia along with its neighboring Asian
nations including China, India, Singapore, Indonesia and Vietnam. Based on the endowments
there is also discussion on the trade patterns of the country.

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Table of Contents
Introduction......................................................................................................................................3
Factor Endowments of Australia and Neighboring Asian Countries..............................................3
Reflection of the Trade Patterns......................................................................................................4
Conclusion.......................................................................................................................................5
References:......................................................................................................................................6

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Introduction
The report aims at discussing the international business scenario. It primarily focuses on
the factor endowments of Australia and its neighboring Asian nations like the China, India,
Singapore, Indonesia and Vietnam. The report also discusses about the merits of the endowments
along with a reflection on the trade patterns.
Factor Endowments of Australia and Neighboring Asian Countries
In terms of economics, factor endowments refer to the quantity of labor, land,
entrepreneurship and capital possessed by a country for manufacturing (Otsuka, Liu &
Yamauchi, 2013). The countries possessing larger endowment of the resources becomes
prosperous compared to the countries with smaller endowments in spite of other things being
equal. However, it is seen that economies of the new world have inherited attractive
endowments. Therefore, the factors determining factor endowments includes:
 Political stability and historical development
 Demographic and Social Issues
 Natural Resources and Climatic Conditions
 Access to the capital, quality workforce and economic development
 Freedom of pursuing entrepreneurial activities along with necessary
entrepreneurial skills
Australia has huge supply of the natural resources that includes grazing land, iron ore,
coal and bauxite (Abad, 2013). Asian country like Indonesia and Singapore has resources like

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extremely skilled workforce that they use for making high-end electrical equipments and cars.
China being an Asian country possesses the resource of cheaper labor force for producing
various competitively priced items like clothing, footwear and textile. The country has also
become a leader in the sector of manufacturing due to its ability in manufacturing quality items
at comparatively cheaper prices. The rise of China as a manufacturing nation was because of
huge investment in the manufacturing capacity by the Chinese business, availability of low cost
and high skilled workforce and the enthusiasm of the Chinese government for investing in the
industrial infrastructure (Lin, 2013). The influence of the Chinese has led to the reduction in
prices of the manufactured goods that has led to increase in the disposable income of people. In
context of distribution of factors amongst the countries, Australia has a rich fertile land
compared to Singapore, Indonesia and Vietnam and hence possesses a competitive advantage in
growing grains. The latter countries are endowed with enough capital and show a comparative
advantage mostly in the capital-intensive industrial commodities. There is abundant supply of
agricultural land along with a very scanty population that makes land cheaper but wages higher
compared to the other countries. Thus, Australia is suitable for manufacturing goods that requires
vast areas of the land along with cheaper labor. For instance, this is actually the case with the
production of the wools. The process of sheep- raising is quite simple for a country that has vast
areas of land. Therefore, wool produced in Australia is at a comparatively lower cost. Similarly,
regions like Vietnam and India have abundant labor supply both skilled and unskilled thereby
making it profitable for them to specialize in the manufacturing sector.
Reflection of the Trade Patterns
The difference in factor endowments will make trade for each of the countries (Feenstra,
2015). For instance, Pacific Brands that represents a textile firm producing brands like Bonds

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outsourced the production to the various Chinese firms. Thus, trade allows the countries in
having access to the service and goods that cannot be produced in particular country.
Conclusion
The report ends with a discussion of the trade patterns based on the factor endowments.
The report also gives an overview of the factor endowments of not only Australia but also its
neighboring countries like China, India, Singapore, Vietnam and Indonesia

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References:
Abad, L. A. (2013). Persistent inequality? Trade, factor endowments, and inequality in
republican Latin America. The Journal of Economic History, 73(1), 38-78.
Feenstra, R. C. (2015). Advanced international trade: theory and evidence. Princeton university
press.
Lin, J. Y. (2013). Demystifying the Chinese economy. Australian Economic Review, 46(3), 259-
268.
Otsuka, K., Liu, Y., & Yamauchi, F. (2013). Factor endowments, wage growth, and changing
food self-sufficiency: Evidence from country-level panel data. American Journal of
Agricultural Economics, 95(5), 1252-1258.