Correct Theories
One of the trade theories demonstrated to be correct is the new trade theory. The trade theory asserts that a critical element in evaluating the international trade patterns is the network effects and the economies of scale in key industries. The new trade theory incorporates the advantage of new early entrants firms that become the most dominant market. The article provided highlights that Chile, through Mr. Garcés, became the first entrant into the cherries market. Garcés has been the biggest producer of the cherries, as seen in the increased output in the more than 15 years. As a result, Chile has been more advantageous than any other country in becoming China’s leading exporters of cherries. As a new entrant into the cherries market, China has imported cherries worth $1.1 billion in 2018, which is twice the value in 2017.
The second theory that has been used in the article is the product lifecycle theory. It is noted that the production declines and drifts from the point of origin after product adoption. In given conditions, the product becomes imported by the nation that invented the product. The article demonstrates the product lifecycle to be correct because Chile as the giant producer of the cherries started to import the Peruvian pisco, which rivals the Chileans produce. In the maturity product stage, increased production approaches are established, and foreign demand rises. According to the article, mass production was done by smaller firm called Greenex using intelligent processing equipment that cost $3.2 million. The costly machine ensured that the inferior fruits were separated from the best produce. The machine washes the produce and plucks unwanted stems, and sorts the fruits by defects, weight, form, and color. Another production approach due to the increased demand was the use of better farming practices and new varieties. High-density farming is used as a new technique. Garcés utilizes giant fans after heavy rains and during winter to warm trees. Helicopters are equipped with the draughts of air to dry the Chilean cherries. Plastic bags were also shipped from the United States to contain the cherries by regulating the inside air.
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The other theory is that the Heckscher-Ohlin theory. The theory argues that nations with relatively limited labor will import labor-intensive equipment. The article asserts that Chile lacked the labor to handle the fieldwork, as seen by the increased labor introduced into the fields during the 2015 ad 2017 periods.
Counter Theories
The article counters the product lifecycle theory. The theory argues that in the initial stages of the product’s lifecycle, all labor and parts linked to the product come from the area the product was first realized. It is noted that the production declines and drifts from the point of origin after product adoption. In given conditions, the product becomes imported by the nation that invented the product. First, the article counters the theory based on the area labor being part of the product. The cherries need the field labor, which no Chileans are willing to be part of. Immigrants from countries such as Venezuela and Haiti were considered between 2015 and 2017. Immigrants averted the labor shortage, which the local Chileans disregarded.
The other theory is that the Heckscher-Ohlin theory. The theory argues that nations with capital-intensive will tend to export capital-intensive products. The article asserts that Chile had the equipment already and there was no need to export them as the equipment was much needed. The capital-intensive methods that Chile used included helicopters used to help dry the cherries and the intelligent processing machine that sorted the cherries which could be internally owned.
