International trade Essay Example | Topics and Well Written Essays - 1000 words - 2

International trade - Essay ExampleIt has made remarkable conflicting investments, mostly in its nearby countries, owing to its huge capital reserve and high food market prices. For LUKoil, contradictory acquisitions are a means of acquiring experienced workers and technological know-how to gain efficiency and effectiveness in both domestic and global competition. It has acquired 800 U.S. stations from ConocoPhillips and 100 per cent of Getty Petroleum in the United States. It is unconditional for both Russia and LUKoil to export petroleum in order to fulfil their economic goals. However, LUKoils future big businessman to export may be hampered by the sorry state of political relations of Russia both inside and outside the nation. Thus, to make sure that the company operates successfully, it must lay more emphasis on foreign investments and relations with the oil companies in the West.Russias position as an oil exporter can be explained on the basis of the theory of absolute as well as competitive advantage. Russia ranks eighth largest in the initiation in terms of its oil reserves and hence the country enjoys the natural gift of such a comparative advantage. As compared to Saudi Arabia, Russia presently has 15 more established oil reserves. Besides, the country enjoys not only natural but also acquired advantages with respect to oil production. In the global oil market the prices are determined by the basic laws of demand and supply. Of Russias total oil production, just 27 per cent is put to use for inland purposes and the remaining 73 per cent is exported. Moreover, its oil companies have precipitate up as major players in the global competition. Thus, factor proportions theory is also valid for Russias competitive advantage. The country similarity theory can also be applied in this slip if we consider the fact that a major fall apart of its foreign expansion corresponds to the countries that were formerly a part of the Soviet Union. In addition to this, Russias global position as an oil exporter can be