Government programs: sources of competitive advantage 14 national export promotion a comparative study of hotels a and b in zimbabwe, journal of emerging trends in economics and management sciences (jetems) 3(4): 380-388 asli goksoy. The basic economic argument in favor of a volunteer army and against conscription rests on the fundamental economic principles of comparative advantage and specialization people’s opportunity costs of producing various goods and services, including military services, differ. Comparative advantage versus absolute advantage absolute advantage is anything a country does more efficiently than other countries nations that are blessed with an abundance of farmland, fresh water, and oil reserves have an absolute advantage in agriculture, gasoline, and petrochemicals. Sources and implications of comparative advantage alan v deardorff university of michigan ohlin lectures • lecture 1: defining comparative advantage • lecture 2: sources of comparative advantage lecture 2: sources of ca • causes of ca in theory • only in a hopelessly distorted economy, might ca be a guide to policy.
The misconception between comparative advantage and competitive advantage will bring potential harm to the national (or regional) economic development pathways the idea may lead countries (or regions) to choose strategy against their own comparative advantage in the formulation of economic development strategies. Comparative advantage is a dynamic concept meaning that it can and does change over time for a country, the following factors are important in determining the relative unit costs of production: 1 the quantity and quality of factors of production available for example some countries have an abundant supply of good quality farmland, oil and gas, fossil fuels. Research on comparative advantage and economic development had given pride of place to tech- nology/innovation together with physical and human capital accumulation as the drivers both of growth and, in the tradition of ricardo and heckscher-ohlin, of comparative advantage.
Of comparative advantage affects the degree of competitiveness of nations, it is logical to integrate the three economic lenses to explore the global diversification strategy of state capitalism. What generates comparative advantage we look briefly at geography, factor proportions, increasing returns to scale and institutions such as labor market flexibility. In business, a competitive advantage is the attribute that allows an organization to outperform its competitorsa competitive advantage may include access to natural resources, such as high-grade ores or a low-cost power source, highly skilled labor, geographic location, high entry barriers, and access to new technology. Comparative advantage goes camping to build an intuitive understanding of how comparative advantage can benefit all parties, set aside examples that involve national economies for a moment and consider the situation of a group of friends who decide to go camping together.
Among the main sources of comparative advantage are the following: a climate and natural resources, relative abundance of labor and capital, technology, external diseconomies b climate and natural resources, relative abundance of labor and capital, technology, external economies. Economic theory suggests that, if countries apply the principle of comparative advantage, combined output will be increased in comparison with the output that would be produced if the two countries tried to become self-sufficient and allocate resources towards production of both goods. Comparative advantage resides in the factor endowments and created endowments of particular regions factor endowments include land, natural resources, labor, and the size of the local population factor endowments include land, natural resources, labor, and the size of the local population.
The second section of the paper focuses on analyzing the sources of comparative advantage of national economies the paper continues with an analysis of the international movement of production factors. Theory of international trade international trade takes place because of the variations in productive factors in different countries the variations of productive factors cause differences in price in different countries and the price differences are the main cause of international trade. The spread of technology across national boundaries means that comparative advantage can change the most technologically advanced countries generally have the advantage in making new products, but as time passes other countries may gain the advantage.
Evidence on comparative advantage from japan differences in geography, climate and natural resources give some countries a in fact, classical economist david ricardo first wrote about this in the context of why it made sense for portugal to produce wine and for england to produce cloth. Possibilities curve to shift outward in reference to economic growth, the role that comparative advantage play in trade among member nations as well as the effect on the standard of living among trading nations and some advantages and disadvantages of free trade does a reduction in trade barriers cause a.
The chinese have a comparative advantage in shirt manufacturing, as they have the lowest opportunity cost (1/2 bicycle) in that good likewise, the italians have a comparative advantage in bicycle manufacturing as they have the lowest opportunity cost (5/3 shirts) in that good. Comparative advantage is a dynamic concept meaning that it changes over time what are the main sources of comparative advantage for a country, some of the factors below are important in determining the relative unit costs of production: entrepreneurs in a country develop a new comparative. For the interactions between comparative, competitive and absolute advantage 1 an exception is the work of brander (1981), which shows how oligopolistic competition can lead to two-way trade in a single sector.