What is a Comparative Advantage?

The main body of comparative advantage is a comparatively high value-added comparative advantage formed by innate factor endowment or acquired learning innovation, including comparative competitive advantage and comparative cooperation advantage. The comparative advantage of market entities can lead to an increase in market share, an increase in cooperation opportunities, a reduction in costs and an increase in profitability. With the development of society and the transformation of the mode of economic growth, the comparative advantage formed by innate factor endowments will gradually weaken, and its role and status will gradually diminish; the comparative advantage formed by the acquired learning innovation will gradually strengthen, Its role and status will gradually increase. In the era of the smart economy, the comparative advantage of higher value-added based on acquired learning and innovation will become the dominant comparative advantage. Developing countries should form a comparatively high value-added comparative advantage through independent innovation, and transform the comparative advantage into a competitive advantage and a cooperation advantage, so that they can succeed later and achieve transcendent development. ^[1]

Comparative Advantage

The comparative advantage subject is formed higher by innate factor endowment or acquired learning innovation

Comparative advantage refers to the behavior of one producer producing an item at an opportunity cost lower than another producer. ^[2]

Speaking of comparative advantage, we must mention a concept corresponding to it.

(1) Assume that there are only two countries and two commodities (X and Y commodities) in trade. The purpose of this hypothesis is to use one

Facing some challenges

Since the two countries happen to have different commodity production

The principle of comparative advantage was an important concept in international trade. It is now widely used in the comparison of various competitions and cooperations, not just in issues such as trade between enterprises. For example, the functional positioning of cities, international economic cooperation, comparison of abilities between job applicants,

The Theory of Comparative Advantage can be expressed as: Everyone consumes goods or services produced by many other people in his country and around the world. A person who can produce the goods with less input is called producing the goods People who have an absolute advantage and who have a smaller opportunity cost of producing the item are said to have comparative advantage, while the benefits of trade are based on comparative advantage, not absolute advantage. Trade can make everyone better off because it makes people You can specialize in activities where you have a comparative advantage, but this principle is not just for individuals. The difference in labor productivity between the two countries is not equal in any commodity. For countries that are in absolute advantage, they should concentrate their efforts on producing goods with greater advantages, and countries in absolute disadvantage should focus on producing goods with less disadvantages, and then exchange each other through international trade, saving labor and gaining benefit.