What is comparative advantage? Identify at least 5 comparative advantages that Pakistan has. Also identify 5 potential sectors which can be easily transformed into Pakistan’s comparative advantage by just little governmental support. (5 Marks – 250 Words)
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Comparative advantage is an economy's ability to produce a particular good or service at a lower opportunity cost than its trading partners. A comparative advantage gives a company the ability to sell goods and services at a lower price than its competitors and realize stronger sales margins.
The law of comparative advantage is popularly attributed to English political economist David Ricardo and his book “On the Principles of Political Economy and Taxation” written in 1817, although it is likely that Ricardo's mentor, James Mill, originated the analysis.
The results show that Pakistan has a higher comparative advantage in raw cotton, cereals, raw leather and fruits, whereas a comparative disadvantage is observed in dairy products. The export competitiveness of raw cotton and leather has increased, whereas the textile industry has witnessed deterioration