|
|
| *Ostroff, Fair and Company>>>Other - Careers & Employment |
How does Comparative Advantage exist today? |
Another question I dont get. I am assuming you are talking about the comparative advantage certain nations have in certain industries in global trade. Comparative advantage exists where a nation has lower marginal costs to produce a good or service due to educational differences, geographical differences, differences in legal structures, skill differences, wealth differences and so on. In the United States, the primary comparative advantage is in the capacity to improve processes and the use of intellectual knowledge. Certain nations, such as Japan and Germany have a superior comparative advantage in this area, but the United States grants greater legal flexibility in employment resulting in high comparative wages in the United States The median German worker makes more than the median American worker as a result. Germany produces the same physical output as the United States but with 20% of the workforce. It uses capital in a much more intensive manner. Even though German workers are paid more, they cost less due to the substitution of capital for workers. Likewise, in Bangladesh the median worker produces 1/30th of what the median American worker produces, if memory serves me correct. Bangladeshi workers hold a comparative advantage in those low wage tasks which are below American minimum wage and require little skill. They do the jobs anyone could do, but which are undesired because they would have to pay so little in order to be competitive. This however, is an advantage to Bangladesh in that it could lock up certain industries and as skills rise, prices for the goods and wages could rise, in the absence of competitors. To be competitive as a worker in America today, you need to be in fields that no one else wants to be in, such as bricklayer or CPA and so consequently pay good wages. Lower product positions, such as worker in McDonald's add much less to the national well being and as such are paid less. |
| Tags |
| Credit Corporations Other - Careers & Employment Technology Marketing & Sales Law & Legal Health Care Government & Non-Profit |
Finance Categories--Copyright/IP Policy--Contact Webmaster |