Definition Factor Endowments. Description.
Factor Endowments are the resources which a country
possess. The traditional main factors of production are land, location, resources,
labor, capital, and population. These factors taken together make up the Comparative
Advantage of a Nation.
Factor endowments are determined by:
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geographical features such as climatic conditions and natural
resources.
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historical development and political stability.
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social and demographic issues.
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economic development, size and quality of the workforce
and access to capital.
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entrepreneurial skills and the freedom to pursue entrepreneurial
activities.
Porter suggested in his book: "The Competitive Advantage of
Nations" that it is competitive advantage (based on lower costs, technological
innovation and product differentiation) rather than comparative advantage
that is becoming an important factor in determining the pattern and direction
of international trade.
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Compare also:
Competitive Advantage of Nations |
Industry Attractiveness
| Depletion
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