Question

Discuss the impact of comparative advantage on the global economy, the effect of globalization and the development of International trade.

Answer 1

The comparative advantage which followed by the countries in determining the selection of goods and services which should specialise in production. This will suggest which goods and service should produce by each country. If countries apply the principle of comparative advantage will lead to increase in the combined output and also a self sufficient economy which efficiently allocated resources. This will helps to specialise the production of goods and also increase the trade relation with other countries. This principle will also lower the opportunity cost. This will make the high level cooperation of countries and also the import and export increased.
The globalisation will create greater opportunities for the domestic firms. The business in the developing countries has access to capital flows, technology, human capital, cheaper imports and larger export markets. Thus globalisation will improve the flow of these resources from developed country to developing and under developed countries. This will give access to the world market to transitional countries. Te globalisation will affect the allocation of production which is efficient and less costly for the global world. The globalisation will increase the name of developing countries to the global market. This will enhance the development of the country in every perspectives. This may leads to the increase trading relation of developing country with the rest of the world. Thus the international trade may increase this relation and also it will improve the human and capital mobility across the world. This mobilisation and migration will improve the living standard of the people and also the national output.