Question

What are the differences in cultural, political, and economic systems among countries that can lead to a comparative advantage for one country over another (e.g. U.S. in cotton versus other places)?

Answer 1

Answer:-

The differences in cultural, political and economic systems among countries that could lead to comparative advantage of one country over another are as follows:-

? Economic system differences :- A country that is better in producing a given product or service using fewer resources than another will have a comparative advantage. For instance, the Asian countries have a comparative advantage in the manufacturing of the electronics when compared to the U.S since they can access cheap labor and expertise.

? Political system differences :-A country that is more stable than another can produce a give product or service better than the other because it has no disruptions in production processes and as such it will have a comparative advantage in producing this product as compared to the other country which produces a similar product.

? Cultural system differences :- A country whose government has a norm of supporting a given industry in producing certain products like development of software by offering it incentives and tax cuts, it can have a comparative advantage over another country that does not have this culture of supporting local industries.