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Sep 9th, 2014
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Question description

plz find below the 2 studnts that you need to prepare reply on each one short one no more 200 words each (2 parrgraphs+2 references) for each post 

first post :-

Comparative advantage theory entails the trading process and its outcomes for the participating countries and the world. The differences in the production efficiencies between the countries determine the comparative advantages and exports and it is the motive for trading between the counties. The theory indicates the lowest cost production as the advantage for a country to produce and exporting certain products. By utilizing this advantage, the country can further increase its efficiency by specializing in these products. The comparative advantages can be gained even by countries with relatively low cost production, which at the same time are not having absolute advantages in producing these products, by specializing in the products that countries with absolute advantage in these products are less efficient compared to other products. This will free up the counties with absolute advantage to maximize its resource utilization on producing the products with higher efficiency. Eventually, the aggregated results of trading will lead to higher productivity and quality resulted from competitions and specialization.(Carbaugh, 2011)

The sources of the comparative advantages include natural resources, large scale production and technology. In this post, natural resources and technology will be demonstrated as sources of comparative advantages. The abundance of natural resources within a country enables it to produce products depend on these resources at a lower cost. For example, Saudi Arabia has benefited from its massive oil resources to build its comparative advantages based on oil and petrochemical industries. Saudi Arabia exports oil products to pay for imports from other products. Similarly, other countries specialize in exporting products based on natural resources like wood and lumber. Climate is also natural resource that can be utilized to build comparative advantages based on agricultural products. (Wonnacott, 2014)

Technology is another source for comparative advantages. Countries with advanced technological infrastructure such as Japan and US are able to produce high-technological products such as computers at a lower cost .The major challenge to retain these advantages is the nature of rapid changes in the technologies. Moreover, technologies substantiated the global trading movement by overcoming geographical limitations through e-commerce. This technological development has unlocked a lot opportunities of comparative advantages sources globally. (Wonnacott, 2014)


second post

Absolute and Comparative Advantage

We can start by defining the absolute advantage to conclude the comparative advantage clearer. Absolute advantage occurs when two nation and two products available and each nation can produce one product in very low cost, each nation good in one product not both then the global trade take place. The absolute advantage can be the case but not always, David Ricardo developed comparative advantage theory where not country have to products with absolute advantage yet they may trade for and buy the product in advantage of cost relative advantage.

There are different sources of comparative advantage we can consider climate, Geography, Natural resource, labor market, finance, Technology and Time zone.

We will consider the Time zone as sources for comparative advantage, where with the current globalization effect including networking and telecom make in easy to have employees working for banking services from other country. One of the fastest-growing parts of this industry is “remote maintenance” whereby Indian companies debug software for companies in other parts of the world, often taking advantage of the time difference to offer overnight service. Different in time zone can reduce the night shift and extra costs (Dollar 2001).

Technological differences as source of comparative advantage, where these differences among nation are another plausible explanation of the high degree of specialization that continues among developed countries. Countries with R&D and high tech centers like US, Japan and Germany export technology to other part of the word (Kikuchi 2009).

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