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Team 2:

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KT Stevens

on 3 March 2014

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Transcript of Team 2:

Team 2:

The Rise of India's Drug Industry

India's History with Pharmaceuticals
Reputed as producing cheap knock-offs of patented drugs
Violated intellectual property rights
Unable to sell knock-offs in developed markets
Foreign investors were not interested
Greatly limited India with potential business opportunities
Turn around for India's Pharmaceutical Sector
2005: WTO agreement
India agreed to comply with WTO rules on property rights
Counterfeit products were no longer produced
Patents would be respected
Foreign companies began doing business with India

2010: Pharmaceuticals generated $24B
Double the figure of 2005
Exports:
2000: $1B
2010: $10B
Partnerships with Western and Indian firms can be attributed to the rapid growth of the industry

Why companies are investing in India's pharmaceutical market:

Low wages
Educated workforce
Widespread use of English as a business language
Gives India a
comparative advantage

The Rise of Bangladesh's Textile Trade
Bangladesh's History with Textile Trading
Prior to 2005, Bangladesh was the leading textile exporter with no competition

Presently, China and Indonesia are the main competition within this sector

Despite the global economic crisis in 2008, Bangladesh's textiles continued to grow
Bangladesh's Background

One of the world's poorest countries
Relies heavily on textile exports in order to:
Generate income
Create employment opportunities
Produce economic growth
Advantages of Doing Business with Bangladesh
Low labor costs
Wage rates are ~$50-60/month, half the minimum wage in China
3/4 of all inputs are produced locally
Saves transportation and storage costs
Businesses are not associated with China
Western countries have become wary of becoming too heavily dependent on China
Disadvantages:
Constant disruption in electricity
Under investments made by the government in power generation
Inferior roads and ports affecting the accessibility and transporting of products
Why was the shift to a free trade regime in the textile industry good for Bangladesh?
Bangladesh is able to specialize in manufacturing and exporting textiles efficiently

Bangladesh has the cheapest labor which is attractive to investors
Who benefits when retailers in the US source textiles from low-wage countries such as Bangladesh? Who might lose? Do the gains outweigh the losses?
Beneficiaries:
US consumers and retailers
Creates employment opportunities in Bangladesh

Losers:
Competitive countries within the sector
Loss of jobs within the US

Gains vs. Losses
Gains to losses ratio is equal
1 job lost US= 1 job created Bangladesh
What international trade theory, or theories, explain the rise of Bangladesh as a textile exporting powerhouse?
Smith's Theory of Absolute Advantage
Prior to 2005, Bangladesh was the leading force for efficiently producing textiles over other countries
Ricardo's Theory of Comparative Advantage
Positive-sum game (win-win)
Heckscher-Ohlin Theory
Labor endowments
New Trade Theory
Large scale output reduces unit cost for retailers
How secure is Bangladesh's textile industry from foreign competition? What factors could ultimately lead to a decline?
Bangladesh is not exploited in the media as much as China is in relation to labor conditions
Cheapest production
Declining factors:
An efficiency increase among competition

India in the News:
Source: United Press International, Inc., Asia; http://www.upiasia.com/Health/2014/02/15/US-voices-concern-over-safety-of-Indian-pharmaceuticals/UPI-46841392489648/
US FDA is skeptical about continuing business with the pharmaceutical companies in India due to lapses in quality and safety
"Ranbaxy, one of India's top drug manufacturers, pleaded guilty to felony charges regarding safety at its plants and was ordered to pay a $500 million fine last year.
G.N. Singh, India's top drug regulator, said adhering to U.S. standards would be too big a challenge for Indian companies."
Nick Hoffman
Shanice Long
Justin Oliverio
Heather Smisko
Katie Stevens
Full transcript