Comparative advantage is the theory that free trade between two or more countries will increase consumption and is of mutual benefit to both countries. Each country should export a good for which it has a comparative advantage over and export surplus production in exchange for goods produced in another country which has a comparative advantage for the good. This is under the assumption that there is differences in labour productivity in both countries. According to Comparative advantage even a country with a comparative disadvantage will gain from specialising in most efficient goods. According to Adam Smith (1776) Wealth of Nations, absolute advantage is the ability of a country to produce more than other countries but with less resources.
Absolute affluence is a term used to describe the economic status of those who, while not necessarily affluent compared to their neighbors, are still affluent in terms of human necessities. Absolute poverty, converse to affluence, is the lack of income required to meet the basic needs of food, clothing, and shelter. The thesis provided by Singer is “We have an obligation to prevent at least some absolute poverty”. While, I ultimately agree with Singer, in that absolute poverty must be addressed, and that those of absolute affluence must be the ones to assist, I do disagree with his forceful moral obligation, as well as one of his major objections in regards to triage. Singer’s first premise states that if we can prevent something bad without sacrificing anything of comparable
DEFINITION of 'Comparative Advantage' The reason of a countries engage in the international trade even one country more efficient to produce every single particular goods than other country. The theory of Absolute Advantage founded by Adam Smith on 1776 to describe an entity is the best at doing something than other competitors, in other words, the productivity of each unit of labor is the highest by using the same resources level. Ricardian Model Comparative advantage is an essential concept in International trade which created by David Ricardo on 1817 as the ‘Ricardian Model’ <Ref. On the Principles of Political Economy and Taxation>, it is different from concept of Absolute Advantage easy to confused. In Ricardian Model, the labor productivity is the only
COMPARATIVE ADVANTAGES THEORY As an international business student, and from my knowledge of comparative advantage theory, I can say that when a country has the margin of excellence in the production of their products or services, it can be profitable to two countries to trade, import, export even if one of them could be able to produce every item cheaper than the rival which is the other country. IMPERFECT MARKET THEORY Imperfect theory is the acknowledgement of imperfection within the market which affects the efficient operations of the international market in trade and investment, the factors of imperfection could be caused by externalities in the goods or markets. It can also take the form of government induced regulations and controls
Livestock marketing in Ethiopia: A review of structure, performance and development initiatives. Socio-economics and Policy Research Working Paper 52. ILRI (International Livestock Research Institute), Nairobi, Kenya. 35pp. Agricultural Sample Survey, 2012/13 (2005 E.C.
Relative Poverty refers to people not being able to reach a certain minimum standard of living which is determined by their government, and enjoyed by others within the same country. Unlike Absolute Poverty, Relative Poverty varies from country to country. This essay will explore factors such as the face of poverty in South Africa, the historical causes of poverty, interventions into poverty and how to deal with and solve poverty
Collaborative advantage is concerned with the creation of interaction between two or more organization to achieve company's own objectives, the key point about this that it focuses on outputs of collaboration that could not have been achieved except through collaborating with a good partner. While collaborative inertia, I can say it is a concept to describe poor collaboration performance with slow progresses which lead to failure of achieving anything. The most obvious role to achieve collaborative advantage between two companies taking in consideration that both should realize the fact that they are not separate companies and the two partners should never accept part of their business being run by an outsider, and to share risks, responsibilities
A simple indicator of the very limited value- added in Ethiopian export is still dominant share (roughly 80%) of agricultural export into total exports. In addition trends in three pairs of export commodities can reveal the relative sophistication of Ethiopia’s exports; whether the country is exporting more leather products (e.g. shoes) instead of hide skins more textiles/clothing instead of cotton. Reviewing trends in these three pairs of commodities shows progress in some areas but still limited overall structural change (access capital, Ethiopia’s export performance, 2010). Therefore, the country’s exports are highly concentrated in agricultural commodities while the share of nonagricultural products in total merchandise exports is almost insignificant.
At the very outset, trade refers to the transfer of the ownership of commodities and services from one individual, firm or entity to another in exchange for other commodities and services, or money. The economic theory of Comparative Advantage involves assessing the potential gains from trade for individuals and other economic entities, including firms and nations, that arise from differences in their resource or factor endowments and technological know-how and progress. To put it simply, an economic entity has a comparative advantage over another entity if it is able to produce a particular commodity or service at a comparatively lower cost, specifically, at a lower relative opportunity cost. David Ricardo first illustrated the importance
The Competitive Advantage of Nations Competitive advantage is a business concept which describes to us the characteristics necessary that allow an organisations to outperform its competitors. This can be achieved through many avenues such as providing consumers with greater value by either lowering prices or providing a product or services that justifies a higher cost .Prevailing attitude on this subject matter would suggest that factors like labour cost, interest and exchange rates and economies of scale are principal factors in determining national success. However, we learn from Porters article that real Competitive Advantage is developed by innovation applied to the Diamond Model or The Diamond of National Advantage, which in essence are four characteristics that both individually and as a system collectively form the Diamond of Nations. These Characteristics are: Factor conditions, demand conditions, related and supported industries firm strategy, structure and rivalry. Factor Conditions: This is a nation’s position on factors of production such as skilled labour force or infrastructure that is necessary in order to compete in a given industry.