Absolute Advantage Of Mercantilism

a) Mercantilism

According to the Mercantilism theory, In India Export is more than Import and it is maintaining trade surplus but however when considering zero-sum game which stats that one country will gain results another country will lose

In this case scenario India leads in cashew business and simultaneously Brazil is being as biggest competitor and also East Africa doesn’t lose its market so here no one loses their position so mercantilism is not applicable.

b) Absolute Advantage

As per the Absolute Advantage theory which states that a product is produced than any other country to produce it. In this case, India produces cashew more efficient than East Africa and Russia and also Brazil due to climatic conditions and skilled labors. Also due to utilizing less fertilizers, India is able to produce high-grade nuts which has better flavor and that cause Indian to sell at premium prices by 15 percent more comparing to Brazil and 25 percent more from Mozambique. So Absolute advantage is applicable to this case.

c) Heckscher-Ohlin

Heckscher-Ohlin (HO) theory says that if country resources like land and labor is abundant, then the cost of it would be lower. It also says to export the goods that utilizes locally abundant resources and if goods utilizes more resources that is locally scarce then, import it.

In this case, manufacturing cashew nuts utilize more labor and land which is highly abundant factor and so it is available cheaper in India and East Africa and so that they manufacture Cashew nut and export it to other countries where they can’t produce cashew much due to not suitable land and cheap labor for countries like US and Europe. So HO theory is applicable for this case.

d) International Product life-cycle

International Pro...

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...eir jobs.

3.

If I were an Indian cashew processor, I would improve the quality of the cashews by using natural fertilizers such as cow-dung and neem extract as much as possible by reducing the usage of chemical fertilizer. Currently, cashew seed is processed by using chemicals in order to reduce the time consuming process in the loss of quality and unhealthy cashews. In order to address this problem, can fetch cheap labors from Bihar where labors are cheap and by training them who are easy to adapt and process the cashew seed to make cashews without using chemicals to make high quality cashews. And also look for latest technology cashew seed processing machines in order to get cashew with less breakage which will eventually come as technologies is constantly rising. With these, the production of high quality cashew can be increased and quality can also be increased.