Vietnam’s revealed comparative advantages rely on natural resources and labour-intensive goods. Vietnam’s specialization is very specific among Asian emerging countries, as it still mainly focuses on “horizontal” trade in which traded goods are produced from start to finish in one country.
What is Vietnam’s absolute advantage?
Vietnam has an absolute advantage in the production of textiles. For a given quantity of textiles Vietnam needs 20 units of labour and the US 35 units. Without international trade the production and consumption of the assumed quantities of textiles and cars need a total sum of 105 units of labour in both countries.
What is Vietnam’s comparative advantage in the footwear industry what is USA’s comparative advantage?
In trading with the United States, Vietnam’s comparative advantages will be in products such as textiles, garments, and footwear due to its relatively low labor costs. The United States’ comparative advantages will be in high technology machinery, pharmaceuticals, and financial services.
What is good comparative advantage?
The benefit of comparative advantage is the ability to produce a good or service for a lower opportunity cost. A comparative advantage gives companies the ability to sell goods and services at prices that are lower than their competitors, gaining stronger sales margins and greater profitability.
What is the comparative advantage of Philippines?
The Philippines has a revealed comparative advantage in exporting from high technology industries. They constitute more than 50 percent of total goods exports, and they were affected during the global financial crisis.
What is Vietnam’s largest export?
Vietnam main exports are: telephones, mobile phones and parts thereof (21 percent of total shipments) and textiles (12 percent). Others include: computers and electrical products (12 percent); shoes and footwear (7 percent) and machinery, instruments and accessories (6 percent).
Which country or countries have an absolute advantage and comparative advantage in shoes?
Production Possibilities and Comparative Advantage
The United States has an absolute advantage in productivity with regard to both shoes and refrigerators; that is, it takes fewer workers in the United States than in Mexico to produce both a given number of shoes and a given number of refrigerators.
What is an example of comparative advantage?
For example, if a country is skilled at making both cheese and chocolate, they may determine how much labor goes into producing each good. If it takes one hour of labor to produce 10 units of cheese and one of of labor to produce 20 units of chocolate, then this country has a comparative advantage in making chocolate.
When a country has a comparative advantage?
In economic terms, a country has a comparative advantage when it can produce at a lower opportunity cost than that of trade partners. While a country cannot have a comparative advantage in all goods and services, it can have an absolute advantage in producing all goods.
What are the advantages and disadvantages of comparative advantage?
A country has a comparative advantage if it can produce a good at a lower opportunity cost than another country. A lower opportunity cost means it has to forego less of other goods in order to produce it.
The theory of comparative advantage.
What is China’s comparative advantage?
A contemporary example: China’s comparative advantage with the United States is in the form of cheap labor. Chinese workers produce simple consumer goods at a much lower opportunity cost.
What is Japan’s comparative advantage?
Since Japan’s opportunity cost is lower, Japan has comparative advantage on fish production and will export fish. The comparative advantage of cloth is found the same way.
What is the difference between absolute advantage and comparative advantage?
Absolute Advantage: The ability of an actor to produce more of a good or service than a competitor. Comparative Advantage: The ability of an actor to produce a good or service for a lower opportunity cost than a competitor.