Comparative advantage


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Comparative advantage: China and the Association of Southeast Asian Nations.

Question one

Comparative advantage is an economic theory rooted in the Ricardian economics. The theory opines that, a country has a comparative advantage over another in the production of a good if it can produce it at a lower opportunity cost. The theory offers the most compelling reason for international trade. According to the theory, nations go to international trade because they have superior productivity in an area of industry, and thus they should produce and exports goods for which they have a comparative advantage and import others which other nations have a comparative advantage for. This is the theory that informed the trade agreement amongst China and the Association of Southeast Asian nations.

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The China Post. Indonesia May Impose Anti-dumping Duties on Steel. Web. May 26, 2010. http://www.chinapost.com.tw/business/asia/indonesia/2010/05/26/258097/Indonesia-may.htm Web. October 28, 2011.

Yulisman, Linda. Chinese Steel Threatens Indonesian Made Products.  Asian News Network. Web. July 28, 2011. http://www.asianewsnet.net/home/news.php?id=20253  Web. October 28, 2011.