Comparative Advantage In International Trade Article Reviews Examples

Globalization comes into mind when barter of goods and services take place. In any trading or business-related scenario, separate parties must always ensure fairness when exchanging respective assets and goods. There are two economic theories analyzing the scenario of trading goods and resources, and these two theories are known as comparative advantage and absolute advantage. Comparative advantage focuses on enhancing the quality of produced goods, while absolute advantage determines the capabilities of a company to produce at a highly quantified rate. Choosing a theoretical economic approach may vary depending on the priorities and necessities of concerned parties. However, it is important to focus more on product improvement when it comes to international trade.
Each country has their respective assets and goods, and they must enhance the quality of their assets in order to catch the allure of foreign investors. Majority of the countries use the capitalism as an underlying economic system. Otherwise, other countries who have mixed economic systems in place, with practices related to capitalistic approaches. Most privately owned companies have absolute control over decision-making processes on how they will market their respective products. Capitalism revolves on the concept of globalization, so it is safe to say that applying the concepts of comparative advantage in the realm of international barter seems fit. Capitalism as an economic system created a wave of foreign products entering the local market scene. Therefore, countries are much encouraged to double their focus on creating high-quality goods and offering services. Comparative advantage as an economic theory brings out the best in countries to focus more on specialization, as it gives the country its own marketable identity. More importantly, this economic theory lies on the principles of “quality over quantity."