Absolute and Comparative Advantage
• Absolute advantage Country can maintain a monopoly or produce at a lower cost than any competitor.
• Example: China’s domination of silk production for centuries.
• Rare these days, mostly tied to climate advantages for growing certain crops.
• Comparative advantage Country can supply a product more efficiently and at lower cost than it can supply other goods, compared with other countries.
• Example: India’s combination of a highly educated workforce and low wage scale.