International trade is the exchange of goods and services between nations. These are known as imports, where the country pays another for its goods and services. And there are exports, where the country sells its goods and services.
Table of Contents What is Comparative Advantage Comparative Advantage Examples Absolute Advantage vs Comparative Advantage How to Calculate Comparative Advantage Comparative Advantage FAQs Comparative Advantage Definition Written by Paul Boyce Posted in Macroeconomics > International Trade Last Updated October 30, 2022 What is Comparative Advantage Comparative advantage is where a nation is able to produce
Protectionism is whereby nations aim to prevent or restrict the supply of goods coming into the country. In other words, it employs various tools to prevent international competition competing with local businesses.
Absolute advantage is where a nation is more efficient at making a product than another. In other words, it requires fewer resources to make a final good or service.
A barrier to entry is simply an obstacle that new businesses face when entering the market. This can come in the form of high start-up costs, or strong branded competitors.
True free markets don’t exist anywhere in the world. This is because free markets and free trade go hand in hand. There exists no country that has free trade with every other. Although Hong Kong doesn’t operate a tariff regime, it is unable to export its products and services to others free of tariffs. Free market ideologies such as neoliberalism are attacked and concluded that they have failed.
