Existence Of Comparative Advantage Research Articles

MEASURING THE POTENTIAL OF ECONOMIC DEVELOPMENT OF THE SVERDLOVSK REGION BASED ON COMPARATIVE ADVANTAGES

The goal of this paper is to reveal the key industries of comparative advantage for the Sverdlovsk region in order to make conclusions about the potential of the region’s economic development. We study comparative advantages of the Sverdlovsk region based on data for 85 Russian regions covering the period from 2003 to 2018. During the first stage of the research four groups of goods out of twenty-two groups were identified as those in which the Sverdlovsk region possibly has comparative advantages based on the index of revealed comparative advantages developed by Balassa and on the Lafay index. During the next stage, the existence of comparative advantages in these categories of goods was checked by comparison with the other regions of Russia. According to the results of the research a range of recommendations can be developed to foster economic growth of the Sverdlovsk region.

Food Security and Agricultural Trade Liberalization

Many Sub-Saharan African countries are highly dependent on the agricultural sector for the livelihood of the population. Agriculture is source of livelihood for 64 percent of the population in the region; the sector contributes about one-fifth of total gross domestic product, and about 12 per cent of the total export earnings for the region. These countries are gifted with abundant land, labor and natural resources indicating existence of comparative advantage in the agriculture sector. With the existence of comparative advantage, one can reasonably expect the continent to be able to feed its citizens. However, food security is of particular concern to many Sub-Saharan African countries and a daily problem for large parts of the population. Many of the countries which faced recurrent food shortage for the period 1998-2002 are found in Sub-Saharan Africa.Food security of a country is affected by different factors; one of which is international trade policy. Trade policy reform resulting from the WTO negotiations involves a combination of the three pillars of the Agreement on Agriculture: tariff, domestic support measures and export subsidies. Each of these pillars have one way or another an implication on food security. Lowering of tariff in agricultural products would lead to an increase in import and declining of price of imported goods thereby enhancing food security. However, for a continent like Africa, where more than 64% of the population depends on the sector, the negative consequences could out weigh. The rules on domestic support and export subsidy also have an impact on food security in that their removal will increase the price of food in the world market there by increasing the import bills of food importing countries and decreasing the amount of food supply to food deficit countries in the form of food aid. The removal of support, however, is beneficial in the long run as it would enhance competitiveness of agricultural products from African countries. In light of the fact that trade policy plays a great role in the food security of countries, the issue deserving consideration is the effect of the WTO agricultural trade liberalization on food security and the available mechanisms for addressing the issue.The article examines the food security implications of the WTO agreement on Agriculture. It asserts that the Agreement on Agriculture favors agricultural producers of the developed countries at the cost of producers in developing countries, including Africa. The article will also address the extent to which the realization of the objectives of the Agreement on Agriculture will promote food security in food insecure African countries. Accordingly, the next section will define food security and look into the state of food (in)security in Sub-Saharan African countries as well as the causes for food insecurity. The third chapter touches upon the three pillars of the AoA and their implementation and will also discuss their relationship with food security. The fourth section will highlight the state of affairs in the current negotiation and indicate the reforms necessary to be undertaken under the current round of negotiation which aims towards enhancing food security in the region. The paper will finalize by making some concluding remarks.Presented at the SIEL 2010 Conference in Barcelona.

Comparative Advantage Indices of Selected Livestock Production Sectors in Brunei Darussalam

This study calculates the protection rates and comparative advantage indices of livestock industry in Brunei from an import substitution perspective. Four livestock sub-sectors were being evaluated: broiler, layer, goat and beef cattle. Two measures of government intervention indices were calculated, namely nominal protection rate (NPR) and effective protection rate (EPR). Domestic resource cost (DRC) and resource cost ratio (RCR) indices were computed to determine the comparative advantages of the livestock industry. In general, the results indicate that the livestock industry in Brunei was heavily protected. The study revealed the existence of comparative advantage only for very large farms producing poultry meat and eggs. Similarly in the ruminant sector, goat production appears to have comparative advantage over beef cattle. Small and medium poultry farms and large non-ruminant farms and cattle beef production possess comparative disadvantage despite being highly protected industries.

Economic Interdependence and Stability in an Anarchy System

This paper analyzes links between economic interdependence and the existence and stability of optimal resource allocations under anarchy. The main findings and testable hypotheses are as follows: (1) When economic goods from two states are substitutable for each other, any changes in endowments or technologies from both states affect the resource allocation between the military sector and the economic sector. Moreover, the existence of comparative advantage of production technologies is an essential factor of equilibrium stability. Without any comparative advantage in production technologies, each state has a unique stable equilibrium at which both states build the same military level regardless of their size. With a comparative advantage by each state either in the military sector or in the economic sector, there may exist multiple equilibria containing at least one unstable equilibrium. (2) On the other hand, when economic goods from two states are complementary to each other, the essential factor that affects a state's resource allocation is its own maximum military level of production out of its resource endowment. In this case, there exists a unique stable equilibrium. (3) When both states have the same resource endowments and production technologies, the optimal allocations in the case of substitutes are the same as those in the case of complements, and they are unique and stable. But if the system is not in equilibrium, then during the transition to equilibrium, a state's optimal military level given a rival's military level, tends to be smaller when two states produce complementary goods than when they produce substitutes -- that is, the system fluctuates less in the presence of economic interdependence between states that in the absence of it.

Comparative Advantage in Individuals

THE presence or absence of comparative advantage is important to many fields of inquiry besides international trade. Recently, comparative advantage in the performance of tasks by individuals has been shown to be a minimum requirement for the distribution of labor earnings to be different in form from the distribution of abilities (Sattinger, 1975). In particular, skewness in the earnings distribution arises from comparative advantage. While many economists would take the existence of comparative advantage in individuals for granted, much economic analysis and empirical work depends on the absence of comparative advantage. Sherwin Rosen (1977) has recently analyzed the difficulties in labor aggregation introduced by the presence of comparative advantage. Also, the efficiency units assumption requires the absence of comparative advantage in individuals. In turn, the efficiency units assumption is necessary for empirical work relating the distribution of earnings solely to individual characteristics (Sattinger, 1977), as has often been done in the human capital literature. This paper uses data from mechanical aptitude tests (Paterson and Eliot et al., 1930) to investigate comparative advantage in the performance of tasks by individuals. Using both non-parametric and parametric tests, such comparative advantage is found to exist. The paper then presents a method for obtaining a measure of difficulty given a cardinal measure of abilities, and tests for the possibility of intransitive comparative advantage. Artificial economies are then constructed to reveal the effects of comparative advantage on the distribution of earnings. II. Sources of Comparative Advantage