What factor endowments does Australia have?

What about our neighbouring Asian

nations including China, India, Singapore, Vietnam and Indonesia? Consider each on its
own merits. Do these factor endowments reflect our trade patterns? Share your
observations on the forum.
Each country has different types and amounts of resources that will determine what they can
or cannot produce. The combination of these resources (land, labour, capital and enterprise) is
referred to as a country's factor endowment. (Hill, Cronk & Wickramasekera, 2014).
Factor endowments are determined by,

geographical features such as climatic conditions and natural resources

historical development and political stability

social and demographic issues

economic development, size and quality of the workforce and access to capital

Entrepreneurial skills and the freedom to pursue entrepreneurial activities.

Australia has a large supply of natural resources such as coal, iron ore, bauxite and grazing
land. Japan has a highly skilled workforce that uses advanced technology to produce cars and
electrical equipment. China has a large population and can supply cheap labour to produce
competitively priced textile, clothing and footwear products. China became the world's
manufacturing leader. Increasingly businesses outsourced their manufacturing to China. This
was because China could produce quality manufactured items at very cheap prices. For
example, Pacific Brands, a textile firm that produces brands of clothing such as Bonds, closed
its Australian manufacturing plants and outsourced their production to Chinese firms. China's
rise as the world's leading manufacturing nation was caused by Chinese business investment
in manufacturing capacity, a highly skilled and low cost workforce and the Chinese
government's enthusiasm for investing in industrial infrastructure. Most manufactured goods
(such as TV's, other electrical equipment and cars) have become cheaper. As a result the
world's disposable income increased because electrical and manufactured items fell in price.
(Andrew & Kishore ,2009).

In term of the distribution of factors among countries, Australia is rich in fertile land and has
a competitive advantage in grain-growing, whereas countries like Japan, Sweden and the
Netherlands are well endowed with capital and have a comparative advantage in capitalintensive industrial commodities.
Australia has an abundant supply of agricultural land but a scanty population. Land is cheap
and wages are high in comparison with most other countries, therefore productions of goods
that require vast areas of land but little labour are cheap. This is the case with wool, for
example. Sheep-raising requires great areas of simple process; hence wool can be produced
at a lower cost than in countries where land is expensive, even if wages in the other countries
are some what lower than in Australia. Similarly, regions with an abundant supply of labour,
technically trained as well as unskilled, and of capital will find it profitable to specialize in
manufactures. For labour is cheap in such regions than Australia.
Because of different factor endowments, trade would be beneficial for each of these
countries. Trade allows countries to have access to goods and services that are not produced
or cannot be produced efficiently.
REFERENCES
Hill, C.W.L., Cronk, T. & Wickramasekera, R. (2014). Theories of Trade, Investment and
Internationalisation. In C.W.L., Hill, T., Cronk & R., Wickramasekera (Eds). Global Business
Today: Asia Pacific Edition (3rd Ed.) (pp. 74-105), North Ryde: McGraw Hill.
Andrew, C. & Kishore ,G. K.(2009). Testing the Application of Heckscher- Heckscher-Ohlin
Theorem to Contemporary Trade Between Malaysia and Singapore. Journal of Emerging
Knowledge on Emerging Markets. 1 (1 ). Retrieved from,
http://digitalcommons.kennesaw.edu/cgi/viewcontent.cgi?article=1009&context=jekem