Absolute And Comparative Advantage

Absolute advantage is when an industry in a country can produce a product more than other countries with the same resources. Comparative advantage is when an industry in a country can make a product at a lower opportunity cost than other countries. Opportunity cost is when giving up the second best choice when making a decision.

• The enormous surplus of labor in China imperils workers worldwide as international competition puts incessant downward pressure on wages and working conditions, leading the apparel and textile industries to favor the cheapest and most Draconian producers.

Define the concept of comparative advantage. How can a country gain or lose its comparative advantage in the production of a good?

Due to the differences between the countries in its profitable fundamentals; the International Trade occurs. The contracts between the countries consider as the primary driver of the global exchange. These contracts concluded on the basis of the countries beneficial elements and advantages. Each international trade between the countries depends on numerous focal points of this exchange process. The economics and producers effectiveness measured by absolute advantage for these economics/producers. For example; if the producer needs lesser amount of contributions/inputs to provide specific product, then this producer has an absolute advantage in producing

In the race to the bottom, as Mark promptly points out, when price is a priority, workers’ safety is not. However, due to wide unemployment and lack of alternatives in Bangladesh, the workers are ready to work for wages that are next-to-nothing. These workers or proletariats, according to Karl Marx, who have nothing to offer but their labor, are boldly exploited by the bourgeoisie, the owners, to accumulate profits for themselves, disregarding the poor condition of the workers. It also agrees with the conflict view that offshoring leads to further global inequality and the case in question clearly provides an empirical evidence for the argument. Barry however deserves appraisal because unlike his competitor giants, he cares about his workers, paying them three times the minimum wage and checking up on them every few months.

Absolute advantage is when a country produces more of a certain good and less of another good using the same amount of resources. Countries that practice this method are able to take advantage of an economic opportunity that allows them to work more efficiently. For example if two countries agree to import/export for maximum output it creates an absolute advantage to both parties. The U.S can produce more wheat than China, and China can turn around and produce more electronics than the U.S. This occurs because electronic products are cheaper and are now manufactured in China. The factories are bigger and work faster in terms of demand than those in the U.S. There are countries with environmental limitations and are not able to produce crops,

Rajeev Ravisankar is from Nepal. Nepal is low economic level so many people have to work at sweatshop. This is one of the cause why he write this essay. In Rajeev Ravisankar’s Lantern essay, “Sweatshop Oppression”, his said that many people choose or have to work at sweatshop, because they need to support their family. Otherwise, they may have no money to buy food (107). Lantern is a newspaper from Ohio State University, so the audiences are students or professors.

Comparative advantage states that the division of labor should operate freely, without outside interference, because some countries, people, states, etc., have special advantages over the others, that allows them to produce certain goods more

Comparative and Absolute advantages: Comparative advantage is the ability to make or produce something at a lower opportunity cost. Opportunity cost is something that we do every single day in the way we live our lives. This is giving up something for something else. If you wanted to buy some new sports gear for your man cave it may cost $100, but if you only make $50 a week. You unfortunately would have to give up spending any of your money for two whole weeks to buy some of this new swag.

In this article, journalist Nicholas Kristof gives his readers a look at what people from South and Eastern Asia think about the jobs working/living inside of a garbage dump compared to what they think of sweatshops. Also, Kristof explains how he actually encourages the production of more sweatshops. Since he has lived in in East Asia, his wife’s living standards have increased due to sweatshop jobs. Kristof continues to talk about how he does understand how Americans want to help out other countries and think that there should be labor standards, but he makes a good point about how labor standards and “living standards are the two biggest impacts on the cost of textiles, and companies are trying find a balance between these two. This makes

In his New York Times essay, “What Sweatshops Are a Dream,” writer Nicholas D. Kristof argues that the best way to help people who live in the poorest countries is not to campaign against sweatshops but instead promote manufacturing. (PA 109-111). Kristof’s opinion was influenced by the years he spent living in East Asia; he was able to personally observe how sweatshops affected people’s lives. His purpose was to inform the readers about the importance of sweatshops in other countries. Also, promoting manufacturing in sweatshops and how sweatshops can benefit the people and the economy.

Li Qiang, a labor rights activist and the founder of China Labor Watch, states that “they [contractors] are encouraging the exploitation of Chinese laborers by hiring factories based on the lowest price and the fastest production” (Chu and Yun). But what happens as a result, according to an academic journal coauthored by Dara O’Rourke, Ph.D., and industrial hygienist Garrett D. Brown, is that the country becomes a magnet for socially inadequate organizations due to lax enforcement of regulations and the suppression of labor rights activists. Furthermore, the easy accessibility of cheap labor indicates a “troubling model for countries seeking to attract foreign investment and develop domestic enterprise” (O’Rourke and

The country can maximize their wealth by putting the resources in the most competitive industries. Government created comparative advantage rather than free trade because now easier moves the production processes and the machines into countries that can produce more goods (Yeager & Tuereck, 1984). However, many countries now move to new trade theory suggests the ability firms to limit the number of competitors associated with economic scale (reduction of costs with a large scale of output) (Krugman, 1992). The comparative advantage occurs when two-way trade in identical products, it will useful where economic scale is important, but it will create problem with this model. As a result, government must intervene in international trade for protection to domestic firms (Krugman, 1990)

Worker exploitation has always been present in societies all over the world, but more specifically in third world countries as of late. Many of these major western companies, such as the fashion industry, take advantage of the cheap labor that is provided overseas. On one hand it’s beneficial for companies in an economic aspect to use labor overseas, but in a social aspect it’s very detrimental to these very same societies. These major companies essentially come into these individuals lives and take control of every aspect of it economically, socially, and psychologically. In fact, with such a rise in worker exploitation it has even been considered as a term for modern-day slavery.

The principle of comparative advantage provides a simplified theory explaining why free trade is possible, even when one country has an economic disadvantage. Both the Ricardian and Heckscher-Ohlin theories rely on fixed economic assumptions of constant return and perfect competition. However, intuitively the basic principle of business is to increase returns through innovation, improving processes and technology or increasing economies of scale. Organizations understand they control pricing and are price setters, rather than price takers as suggested by perfect competition (Krugman & Obstfeld, 2003). The idea of increasing returns and imperfect competition challenge the foundations of comparative advantage.