Absolute Advantage In International Trade: Comparative Analysis

Absolute advantage breeds more efficiency in the production of goods and delivery of services due to its relatively lower marginal costs of producing an extra unit of a product or service. The lower marginal costs emanate from the availability of cheap labor or material inputs thereby resulting in higher productivity. On the other side, comparative advantage focuses on relating the production outputs of a similar type of goods or services between two nations thus establishing which nation is better than the other (Schumacher, 2012).
Countries with absolute advantage are often associated with the specialization in their production processes by devoting their resources to the production of few selected products or services. For instance, due to the specialization of the United States in the manufacture of

A county’s infrastructure, the level of technology, and labor force are some of the contributing factors that make a nation have a comparative advantage over another (Cuñat &Melitz, 2012). The discovery of comparative advantage amounted to material development in economics and international trade.
The comparative advantage when intertwined with specialization results in a powerful incentive by creating a wide platform for different nations to exchange varying goods and services. When citizens and firms of a given nation concentrate their energies and resources to the production of certain services and goods, they must give up others to attain a competitive edge in the market, thus gaining a comparative advantage (Krugman & Obstfeld, 2009). Due to the differences originating from various nations around the globe regarding natural resource endowment, the level of technology, and innovation among other variances, the cost of producing similar goods differs, thus making it mandatory for the diverse nations to engage in foreign