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Globalization, Geographical Location and National Advantage as the Key Determinants of Competitiveness

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It is not obvious why similarly situated nations such as France and Germany have differing absolute advantages in various manufactured products. The fact that one special combination of entrepreneurial and engineering skills encouraged the production of Porsches in Germany is a more or less historical accident. Similarly, in Switzerland, the craftsmanship required to manufacture watches and clocks could not be predicted from a general knowledge of Switzerland's capital stock and labour force. Like the theory of absolute advantage, the theory of comparative advantage assumes that resources  are fully mobile within a country so that returns to equivalent labour and capital are equalised on a national basis.

However, formal demonstrations of comparative advantage assume that these same resources are not mobile internationally. Thus, any randomly chosen pair of trading countries need not have – and is unlikely to have – similar standards of living or the same general level of technical proficiency (Wikipedia, 2007). Just 50 years ago, the fashion industry of Italy was not so worth noticing. Most of the country’ s elite got their couture clothes from tiny ateliers in Rome. After the First World War opportunities arose new developments in shape of factories was undertaken which attracted professionals to the towns from the decrepit villages.

The technical updation and the skilled workforce played an important part in creating a monopoly in the garment manufacturing industry. In this era, many talented designers firm all over Italy created their own identification and gave rise to Italian fever in the fashion industry. Many designers who played an important part in the establishment of well-known fashion centres also embraced marketing techniques.   Another trend, which played an important part, was the transformation of women in the working force.

These women presented clothes, which had ease and luxury, combined in them. These two characteristics of the clothes attracted American customers to Italian manufacturers.  

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