What is the role of comparative advantage in the store?
KOMRORORATIVE ADVANCE The Trade advantage is an advantage that one country has in the production of specific goods or services over the other. This advantage may come due to the country's infrastructure, workforce, technology or innovation or natural resources. The use of comparative benefits in the trade requires that the countries should spend most of their efforts in the production of these goods where they have a comparative advantage. The contrast is that the country should try to import goods that represent a comparative disadvantage for them and thus create a convenient situation for all nations involved in foreign trade.
Trade between nations has always been a big part of the global economy. This is even more in the case of modern times, due to impressive progress in transport and communication provided by the technology. Each country in the world has specific products that are able to produce at high rate and low -cost compared to Other nations. This is what controls the concept of comparative benefits in the store.
As an example of how a comparative advantage in the trade is reflected, imagine two countries dealing with car production. Earth and produce cars for a long time and have introduced various technological advances that allow them to produce cars at a low price. On the other hand, the automotive industry in the country B is just starting, and as a result, neither the workforce nor the available raw materials contribute to a high level production.
In this case, it makes sense for the ground and to build most of its resources for the production of cars. Earth A should also focus on exporting cars to countries such as Earth B, which lack the ability to produce them at a large level. On the other hand, Earth B is wasting efforts to pursue a high level. Instead, the concept of comparative advantage in the store assumes that this country should focus on the one that is better equipped.
6 Putting money into the production of these goods where the advantage lies,means to take advantage of the occasional cost of this special production. This occasional price is useful because the country in question can generally reap rewards from exports that it sells to other countries. With this system, it is possible for all business partners to play their strengths, balance their weaknesses and benefit from international shops at all times.