Description
Comparative and Absolute Advantages
Purpose of Assignment
This assignment will help students master research and other analytical skills and will help students recognize reasons why economic growth varies by country. By using macroeconomic indicators, students will complete analysis and determine comparative and absolute advantage in different product categories for each country's economy.
Assignment Steps
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Develop a minimum 1,050-word analysis of the international economy in which you do the following:
- As a team, choose three countries from the list below. Research each country, using resources such as the CIA World Fact Book, World Bank data, World Trade Organization (WTO), and the Federal Reserve Bank. Research each of your three chosen country's economic, political, and cultural development:
- USA
- Australia
- Canada
- China
- Saudi Arabia
- Democratic Republic of Congo
- France
- Germany
- Great Britain
- Italy
- Japan
- Analyze measures of economic growth and of comparative and absolute advantage in international trade.
- 👉 Use tables and/or graphs to compare the following economic statistics/indicators of your three chosen countries for the most recent year available and for 2009 (the trough of the last economic cycle):
- Country Real GDP
- Country CPI
- Country Real Exports
- Country Real Imports
- Country Unemployment Rate
- Country Industrial Production
- Discuss reasons why the economic growth of the three countries varies. How does international trade influence the strength of the economy worldwide?
- Discuss the following for each country:
- At least two products that have provided the country an absolute advantage in trade (if any).
- At least two products that have provided the country a comparative advantage in trade.
- Factors that might have prevented any of your three chosen countries from achieving absolute and/or comparative advantages.
Cite a minimum of three peer-reviewed sources.
Format the assignment consistent with APA guidelines.
I only need my part done of the assignment which is in bold letters. The 3 chosen countries and 3 indicators.
Explanation & Answer
Kindly see attached file
Running head: COMPARATIVE AND ABSOLUTE ADVANTAGE
Comparative and Absolute Advantage
(Names)
(Course)
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COMPARATIVE AND ABSOLUTE ADVANTAGE
Comparative and Absolute Advantage
Measures of economic growth
The Real Gross Domestic Product
The real gross domestic product (GDP) is a quantitative measure of the purchase power
of the citizens of a specific country. It is commonly used as a macroeconomic indicator of the
health of the country’s economy taking into account that it takes into account the inflation and
deflation processes that may impact the business cycle. In this regard, a higher gross domestic
product indicates a higher health of the economy, as the citizens of the country would have a
higher amount of money to spend per capita.
The real gross domestic product of the three selected countries is summarized in table 1.
As can be observed, the gross domestic product is higher for Japan and lower for Australia.
According to the ranking of the World Bank, Japan, Germany and Australia occupy the 3rd, 4th
and 14th rank of the worldwide real GDP, respectively.
Table 1. Real GDP of the target countries in 2016. Adapted from the World Bank
Country
Australia
Germany
Japan
Real GDP (millions of US
dollars)
1,204,616
3,466,757
4,939,384
Country Unemployment Rate
The country unemployment rate represents the ratio of unemployed people compared to
the total labor force of the country. In this sense, a higher unemployment rate indicates a higher
proportion of people being unemployed. From this point of view, the unemployment rate is used
as a negative macroeconomic indicator in the sense that healthy economies are characterized by
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COMPARATIVE AND ABSOLUTE ADVANTAGE
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low unemployment rates whereas failed economies are characterized by high unemployment
rates.
The unemployment rate of the three selected countries is summarized in table 2. As can
be observed, the unemployment rate is higher for Australia and lower for Japan.
Table 2. Unemployment rate (Adapted from www.tradingeconomics.com)
Country
Australia
Germany
Japan
Unemployment rate (%)
5.50
3.60
2.80
Country Industrial Production
The country industrial production represents an estimation of the total volume of output
generated by all the industrial sectors of the country. In this sense, it is a macroeconomic
indicator of the economic activity of the country, in the sense that a higher industrial production
implies that a higher number of goods/services are being produced by the country, which will
result in higher sales and exports.
The industrial production of the three selected countries is summarized in table 3. As can
be observed, the industrial production is higher for Germany and lower for Australia.
Table 3. Industrial production (Adapted from www.tradingeconomics.com)
Country
Australia
Germany
Japan
Industrial production
0.70
3.60
2.50
Analysis
Taking the above indicators into account, Germany and Japan would have a significant
comparative advantage over Australia. In this regard, Australia shows the lowest real gross
COMPARATIVE AND ABSOLUTE ADVANTAGE
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domestic product and industrial production and the highest unemployment rate of the three
countries considered.
On the other hand, it seems that Japan and Germany don’t have a significant comparative
advantage among them. In this regard, both countries present similar unemployment rates,
industrial production and real gross domestic product.
COMPARATIVE AND ABSOLUTE ADVANTAGE
References
GDP ranking. (n.d.). Retrieved November 11, 2017, from https://data.worldbank.org/datacatalog/GDP-ranking-table
Industrial Production. (n.d.). Retrieved Novemb...