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Comparative Advantage in International Trade

Certain countries have unique strengths, local resources and talent that can be a comparative advantage to them, and make products at a cheaper cost than other countries. If they indulge in protectionism, the end result is higher costs and inefficiency for all.

Example: China has a low opportunity cost to produce simple consumer goods due to the cheap labour it employs, and countries like France and America do not need to focus on simple goods, so are able to make sophisticated products like rockets, cars and ships.

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INVESTOPEDIA

Comparative Advantage Definition

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