India'sComparativeAdvantage

Having read or heard about American companies outsourcing jobs to India, we may think that outsourcing alone is responsible for India's incredible economic growth, but Indian companies are responsible for more than we realize. Review the three segments of the case and write your responses as instructed.

Nations and businesses engage in international trade to obtain raw materials and goods that are otherwise unavailable to them or available elsewhere at a lower price than that at which they themselves can produce. A nation, or individuals and organizations from a nation, sells surplus materials and goods to acquire funds to buy goods, services, and ideas its people need. Which goods and services a nation sells depends on what resources it has available.


Read the case below and answer the questions that follow.


Part I: India, with a population of 1.2 billion, has experienced incredible economic growth in the past 15 years and is currently the second fastest growing country in the world (China is first). For the past 15 years, the country has shown an average annual growth rate of 6 percent, and analysts believe the country's annual growth rate may increase over the next 10 years. This growth is important to the country's population, which now exists in stark contrast between affluent cities and impoverished areas – on average, an Indian telephone operator earns less than $ 1 an hour, a medical transcriptionist about $ 2 an hour, and an accountant $ 10 an hour, and around 44 percent of the population live on under $ 1 a day.