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Unformatted text preview: The factor-proportions theory says that if labor is scarce then the costs will be high and vice-versa. This explains why the Russian oil companies employ less than 1% of the population. The country-similarity theory says that high-income countries will trade with each other because they produce and consume more, emphasize technical breakthroughs in different industrial sectors, and produce differentiated products and services. Russia is a high-income country that started out investing in the closest countries but has moved to higher income countries. I think LUKoil is buying its own petroleum products distribution companies in the West to diversify its holdings globally and to cut on the costs of distribution in the long run....
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This note was uploaded on 09/08/2010 for the course BUS 187 at San Jose State University .
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