The Comparative Advantage of Greece in the Era of Recession

4221 Words Sep 29th, 2014 17 Pages
The comparative advantage of Greece in the era of recession
Lampros Gallos National and Kapodistrian University of Athens Athens, Greece lam.gal@hotmail.com

Abstract

The aim of this paper is to investigate the export behaviour of Greece and to identify its comparative advantage. Moreover, through the conclusions of the analysis, is investigated whether the export activity of the country coincides with its comparative advantage especially in the present circumstances, those of recession. Initially, we define the comparative advantage based on the approaches of Adam Smith, David Ricardo's and Heckscher-Ohlin. Furthermore we analyze the current situation of the country, Greece’s economic structure and its trade performance, mainly the
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3.2: Greece‟s commercial shipping sector.

3.3: Greece‟s strategically position as the gateway to the EU and SEE.

3.4: Top talent at competitive rates.

3.5: The disadvantages of Greece in the era of internationalization of economies

4. Conclusions.

2

1. Historical and literature review.
International trade theory provides explanations for the pattern of international trade and the distribution of the gains from trade. The study of trade emerged in the era of mercantilism (approximately in 16th century) as a crude set of arguments about how a nation should trade. The theory of International Trade examines the reasons why different countries exchange their products, but in addition the aftermath that this process has, in the internal economy of a country involved in international trade. Adam Smith, in The Wealth of Nations in 1776, postulated that under free trade, each nation should specialize in producing those goods that it could produce most efficiently. Some of these would be exported to pay for the imports of goods that could be produced more efficiently elsewhere. Smith ridiculed the fear of trade by comparing nations to households. Since every household finds it worthwhile to produce only some of its needs and to buy others with products it can sell, the same should apply to nations. The theory of absolute advantage is based on the assumption that the nation is absolutely better (i.e., more efficient) at production of

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