Comparative and Absolute Advantage

4217 words 17 pages
Comparative and Absolute Advantage
ECO 561
Alfred Igbodipe

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
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Thus, the economic growth and progress of China are encouraging to the citizens and investors.
The comparative advantage of China is supported by the manufacturing capability as well as the provision of cheap labor for global corporations. Human resources remain the absolute advantage of the Chinese economy due to the large population in the nation. The expansive population in China has helped China to grow as a manufacturing hub internationally. Therefore, it is necessary to understand the success of the Chinese economic growth tracing it back to its comparative and absolute advantage such as the human resources.
Saudi Arabia
The measure of economic growth rate in Saudi Arabia is the GDP growth rate. It indicates that the economy has grown a significant level expanding by 3.6 percent in the last quarter of 2015. The GDP growth rate of Saudi Arabia has maintained a steady economic growth rate of 4.91 percent in the last few years. The Central Department of Statistics in Saudi Arabia has projected a real economic growth rate for the economy. Within the decline in the demand for oil, the economic growth of Saudi Arabia is expected to decline slightly due to the global competition for oil supply and productions.
Regarding international trade, Saudi Arabia has a global comparative advantage in the manufacture of oil. The economy has numerous reserves of oil, which gives the


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