LUKOIL CASE STUDY: THEORIES AND INSTITUTIONS- TRADE AND

INVESTMENT
1. What theories of trade help to explain Russias position as an oil exporter?
Natural & Acquired Advantage: 15 ore reserves than !audi Ara"ia
!iilarit# $heor#: $rade ostl# %ith neigh"oring countries& forer
e"ers of !oviet 'nion.
(orter )iaond $heor#: National copetitive advantage& %ith favora"le
deand& factor conditions& related & supporting industries and strateg#.
*nterventionist& erchantilis& (+, theories do not appl#.
-. .o% do glo"al political and econoic conditions affect %orld ar/ets & prices
of oil?
0(1, a/es suppl# uncertain
,hinese industriali2ation increases deand.
(olitical unrest in 3ene2uela and %ar in *raq a/es suppl# fro
copetition uncertain.
4. )iscuss the follo%ing stateent as it applies to Russia & +'50il.
Regardless of the advantages a country may gain by trading, international
trade will begin only if companies within that country have competitive
advantages that enable them to be viable traders - and they must foresee
profits in exporting and importing
Russia & +'50il must aintain coparative advantage to "e a"le to
copete in %orld oil ar/et. 0ther%ise& copetitors could use 6)* to ta/e
over "# developing the latest technolog#& ar/eting s/ills and operating
efficiencies.
7. *n +'5oils situation& %hat is the relationship "et%een factor o"ilit# &
exports?
0il production process are capital8intensive and require highl#8speciali2ed
equipent anned "# highl#8s/illed la"or.
*nvestent capital& and la"or goes %here production is ost efficient at
a/ing a profit.
+'5oil serves custoers around the %orld& therefore the# /eep reserves
around the %orld. *n other %ords& o"ile.
5. ,opare role of ,osta Rican and Russian govt. in the use of trade to eet
econoic o"9ectives.
,osta Rica
Russia
)eveloped acquired s/ills in
targeted industries.
$ransfor econo# fro
exporting natural resources to
high8tech anufactured
products.
1xploited deand for their
surplus of natural resources
$ransfored state8o%ned
"usiness to copetitive
privatel# o%ned enterprise