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In: Economics

what are the Comparative and absolute advantages of brazil from 2000-2019

what are the Comparative and absolute advantages of brazil from 2000-2019

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Expert Solution

Comparative and Absolute advantages of Brazil from 2000-2019
Comparative advantage, being the ability to produce a particular commodity better efficient than other, Brazil poses the same on agro-products after the positive shock in production in the year 2004. Being the major importer of agricultural commodities in 1960’s and 70’s it becomes the world’s third largest exporter of agricultural products after US and EU. The comparative advantage which Brazil poses with agro products is not because of the natural factor endowments they pose, but of the effective intervention of the state in the production activities. State driven innovations to acquire new regions and areas to make useful for agriculture made the nation more productive and to compete directly with the known agro exporting countries. Even the idea of the state was to substitute imports by the industrial expansion, it ended up in developing the advantages in agriculture to a different level. Thus also helped in f=developing the comparative advantage in producing machinery including computers.
Absolute advantage, being the ability to produce a commodity better efficient than other producer or other nation being a nation, Brazil poses the same in the production of poultry meat including beef. It also has absolute advantages in oil seeds, ores and etc. Brazil also tops the list for the coffee exporters in the world. The absolute advantage of Brazil can be compared with that of US when US is having absolute advantage on autos. The opportunity cost for producing beef is 1/10 of auto in Brazil where in US it is 3/10 of an auto. Thus there are the products where Brazil is having absolute and comparative advantages.


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